Problem 6-4A (Concluded)
Part 3
a. If the company’s Cash account balance of $27,497 is listed on the
bank reconciliation as $27,947 then:
(i) The final balance that results from adjusting the bank statement
Problem 6-5A (50 minutes)
Part 1
CHAVEZ COMPANY
Bank Reconciliation
September 30, 2015
Bank statement balance ……..
$18,453.25
Book balance …………………..………
$17,404.20
Add
Interest earned $ 12.50
1,682.75
20,136.00
Proceeds of note
less $15 fee … 1,485.00
1,497.50
18,901.70
Deduct
NSF check …………600.25
Error (Check 5904) 30.00
1,864.55
630.25
Adjusted bank balance ……….
$18,271.45
Adjusted book balance ….
$18,271.45
Part 2
Sept. 30
Cash ……………………………………………………….
12.50
Interest Earned …………………………………..…………..
12.50
To record interest earned.
30
Cash ……………………………………………………….
1,485.00
Collection Expense ………………………………….…………..
15.00
Notes Receivable ……………………………….…………..
1,500.00
To record note collection less fee.
30
Accounts Receivable— S.Nilson …………………………..
600.25
Cash ………………………………………………….……
600.25
To charge account for NSF check plus fee.
30
Computer Equipment……………………………….…………..
30.00
Cash ………………………………………………….……
30.00
To correct an entry error.
Problem 6-5A (Concluded)
Part 3
(1) Some of the checks in the numbered sequence may have cleared the
(2) Some of the checks in the numbered sequence may remain
(3) The issuer of the checks may have voided one or more of the checks
(4) Occasionally, a check will reach the bank but the bank will incorrectly
charge the check to the wrong account. When the bank detects the
PROBLEM SET B
Problem 6-1B (20 minutes)
1. Violates both applying technological control and effective segregation
of duties. It is safe to assume that Latisha Tally has knowledge of
employee passwords since she implemented the system of password
2. Violates applying technological controls. The theater’s system needs to
3. Violates segregation of duties. The company needs to have three
4. Violates applying technological controls. The use of the check protector
5. Violates segregation of duties. It is good internal control to separate
duties for cash receipts and cash disbursements. Moreover, an
Problem 6-2B (20 minutes)
Part 1
Jan. 3
Petty Cash …………………………………………………………..
150.00
Cash ……………………………………………………………...
150.00
To establish the petty cash fund.
Jan. 14
Office Supplies Expense ……………………………………...
14.29
Merchandise Inventory* ……………………………………....
19.60
Repairs Expense—Computer ……………………………....
38.57
Miscellaneous Expenses …………………………..………...
12.82
Cash Over and Short …………………………..……………....
2.44
Cash ……………………………………………………………...
87.72
To reimburse the petty cash fund.
* Transportation-in costs are included in Merchandise Inventory
under a perpetual system.
Jan. 15
Petty Cash …………………………………………………………..
50.00
Cash ……………………………………………………………...
50.00
To increase the petty cash fund.
Jan. 31
Advertising Expense …………………………………………...
50.00
Postage Expenses ……………………………………………....
48.19
Delivery Expense …………………………..…………………....
78.00
Cash Over and Short …………………………..……………....
6.46
Cash ……………………………………………………………...
182.65
To reimburse the petty cash fund.**
Jan. 31
Petty Cash …………………………………………………………..
50.00
Cash ……………………………………………………………...
50.00
To increase the petty cash fund.**
Problem 6-3B (30 minutes)
Part 1
Mar. 5
Petty Cash ……………………………………………………….
250
Cash …………………………………………………….…
250
To establish the $250 petty cash fund.
Part 2
Blues Music Center
Petty Cash Payments Report (for March)
Delivery expense
Mar. 11
Delivery of customer’s merchandise …………..…………
$ 10.75
Mileage expense
Mar. 30
Reimbursement for mileage ……………………….….
56.80
Postage expense
Mar. 28
Paid postage ……………………………………………..………..
18.00
Merchandise inventory (transportation-in)*
Mar. 6
COD charges on purchases ……………………….….
$12.50
Mar. 27
COD charges on purchases ……………………….….
45.10
57.60
Office supplies expense
Mar. 12
Purchased file folders ………………………………..…………
14.13
Mar. 14
Reimbursement for office supplies …………….…………
11.65
Mar. 18
Purchased paper ……………………………………….…………
20.54
46.32
Total
$189.47
* Transportation-in costs are included in Merchandise Inventory under a perpetual system.
Part 3
Mar. 31
Delivery Expense …………………………..…………..………..
10.75
Mileage Expense ………………………………………..………..
56.80
Postage Expense ……………………………………….………..
18.00
Merchandise Inventory ………………………………………..
57.60
Office Supplies Expense …………………………….………..
46.32
Cash Over and Short …………………………….………..
1.00
Cash …………………………………………………….…
188.47
To reimburse the petty cash fund.
Mar. 31
Petty Cash ……………………………………………………….
50.00
Cash …………………………………………………….…
50.00
To increase the petty cash fund to $300.
Note: The two entries on Mar. 31 could be combined into one.
Problem 6-4B (30 minutes)
Part 1
SEVERINO CO.
Bank Reconciliation
December 31, 2015
Bank statement balance ……..
$46,822.40
Book balance …………………………..
$32,878.30
Add
Add
Deposit of Dec. 31 …………….
9,583.10
Error (Ck 1267) . $ 9.00
56,405.50
Proceeds of note
less $20 fee …. 18,980.00
18,989.00
51,867.30
Deduct
Deduct
Checks No. 1242 …. $ 410.40
NSF check ……… $ 762.50
1273 …. 4,589.30
Printing fee …….. 99.00
1282 …. 400.00
5,399.70
861.50
Adjusted bank balance ………..
$51,005.80
Adjusted book balance ……….………………….
$51,005.80
Part 2
Dec. 31
Cash …………………………………………………………………….
9.00
Office Supplies ……………………………………………….
9.00
To correct an entry error.
31
Cash …………………………………………………………………….
18,980.00
Collection Expense ……………………………………..……….
20.00
Notes Receivable …………………………………………….
19,000.00
To record note collection less fees.
31
Accounts Receivable—Titus Industries ………..……….
762.50
Cash ……………………………………………………….
762.50
To charge account for NSF check plus fees.
31
Miscellaneous Expenses …………………………..………….
99.00
Cash ……………………………………………………….
99.00
To record check printing charge.
Problem 6-5B (50 minutes)
Part 1
SHAMARA SYSTEMS
Bank Reconciliation
May 31, 2015
Bank statement balance ……….
$21,762.70
Book balance …………………………..
$15,177.30
Add
Add
Deposit of May 31 ………………
2,727.30
24,490.00
Proceeds of note less
$50 fee …………………….…….
7,350.00
22,527.30
Deduct
Deduct
Checks No. 1780 .. $1,425.90
NSF check …. $431.80
1786 .. 353.10
Service charge 14.00
1789 .. 639.50
2,418.50
Error (Ck 1788) 10.00
455.80
Adjusted bank balance …………
$22,071.50
Adjusted book balance ..…………………………
$22,071.50
Part 2
May 31
Cash ……………………………………………………………………
7,350.00
Collection Expense …………………………………..…………
50.00
Notes Receivable ……………………………………………
7,400.00
To record note collection less fee.
31
Accounts Receivable—W. Sox …………………..………
431.80
Cash ……………………………………………………….
431.80
To charge account for NSF check plus fee.
31
Miscellaneous Expenses …………………………..
14.00
Cash ……………………………………………………….
14.00
To record bank service fee.
31
Utilities Expense ……………………………………….…………
10.00
Cash ……………………………………………………….
10.00
To correct an entry error.
Problem 6-5B (Concluded)
Part 3
(1) Some of the checks in the numbered sequence may have cleared the
(2) Some of the checks in the numbered sequence may remain
(3) The issuer of the checks may have voided one or more of the checks
(4) Occasionally, a check will reach the bank but the bank will incorrectly
charge the check to the wrong account. When the bank detects the
error, it will return the check separately with a note of explanation to
the depositor.
SERIAL PROBLEM — SP 6