P7-32B Accounting for petty cash transactions
Learning Objective 4
2. Sep. 30, Cash CR $140
Suppose that on September 1, Cool Gyrations, a disc jockey service, creates a petty cash fund
with an imprest balance of $350. During September, Ruth Mangan, fund custodian, signs the
following petty cash tickets:
Petty Cash Ticket
Number Item Amount
1 Postage for package received $ 25
2 Office party 10
3 Two boxes of stationery 20
4 Printer cartridges 15
5 Business dinner 65
On September 30, prior to replenishment, the fund contains these tickets plus cash of $210. The
accounts affected by petty cash payments are Office Supplies, Entertainment Expense, and
Postage Expense.
Requirements
1. On September 30, how much cash should this petty cash fund hold before it is replenished?
2. Journalize all required entries to (a) create the fund and (b) replenish it. Include explanations.
3. Make the entry on October 1 to increase the fund balance to $425. Include an explanation.
SOLUTION
Requirement 1
P7-33B Preparing a bank reconciliation and journal entries
Learning Objective 6
1. Adjusted Balance $17,580
The May cash records of Donald Insurance follow:
Cash Receipts Cash Payments
Date Cash Debit Check No. Cash Credit
May 4 $ 4,230 1416 $ 890
9 520 1417 120
14 530 1418 630
17 1,950 1419 1,090
31 1,840 1420 1,420
1421 900
1422 670
Donald’s Cash account shows a balance of $17,750 at May 31. On May 31, Donald Insurance
received the following bank statement:
Additional data for the bank reconciliation follow:
a. The EFT credit was a receipt of rent. The EFT debit was an insurance payment.
b. The NSF check was received from a customer.
c. The $1,700 bank collection was for a note receivable.
d. The correct amount of check 1419, for rent expense, is $1,900. Donald’s controller
mistakenly recorded the check for $1,090.
Requirements
1. Prepare the bank reconciliation of Donald Insurance at May 31, 2018.
2. Journalize any required entries from the bank reconciliation.
SOLUTION
Requirement 1
P7-34B Preparing a bank reconciliation and journal entries
Learning Objective 6
1. Book Deductions $630
The October 31 bank statement of Wyndham’s Healthcare has just arrived from State Bank. To
prepare the bank reconciliation, you gather the following data:
a. The October 31 bank balance is $6,290.
b. The bank statement includes two charges for NSF checks from customers. One is for $370
(#1), and the other is for $180 (#2).
c. The following Wyndham’s checks are outstanding at October 31:
Check No. Amount
237 $ 120
288 140
291 570
294 570
295 30
296 110
d. Wyndham’s collects from a few customers by EFT. The October bank statement lists a
$2,200 EFT deposit for a collection on account.
e. The bank statement includes two special deposits that Wyndham’s hasn’t recorded yet: $900
for dividend revenue and $100 for the interest revenue Wyndham’s earned on its bank
balance during October.
f. The bank statement lists a $80 subtraction for the bank service charge.
g. On October 31, the Wyndham’s treasurer deposited $270, but this deposit does not appear on
the bank statement.
h. The bank statement includes a $750 deduction for a check drawn by Multi-State Freight
Company. Wyndham’s notified the bank of this bank error.
i. Wyndham’s Cash account shows a balance of $3,200 on October 31.
Requirements
1. Prepare the bank reconciliation for Wyndham’s Healthcare at October 31, 2018.
2. Journalize any required entries from the bank reconciliation. Include an explanation for each
entry.
SOLUTION
Requirement 1
Using Excel
P7-35 Using Excel for a Bank Reconciliation
Download an Excel template for this problem online in MyAccountingLab or at
The cash balance on the books of Wilderness Associates on October 31 is $3,546.
Lori reviews the bank statement, and notes the checking account balance at October 31 is $2,445.
The bank statement also reveals that the bank collected a note receivable on behalf of Wilderness
Associates—the principal was $1,500 and the interest was $15. One customer’s check for $29
was returned by the bank for insufficient funds. Two additional items on the bank statement were
the monthly EFT for the utilities, $250, and the bank service fee of $12. Lori notes that the cash
deposit made on October 31 of $3,300 does not appear on the statement, and that three checks
totaling $975 had not cleared the bank account when the bank statement was prepared.
Requirements
1. Prepare the bank reconciliation for Wilderness Associates at October 31, 2018. Format
appropriate cells with dollar signs and double underlines. Use Excel formulas to calculate
subtotals and totals.
2. Journalize the entries based on the bank reconciliation. For dollar amounts, use cell
references on bank reconciliation.
Continuing Problem
P7-36 Preparing a bank reconciliation and journal entries
This problem continues the Canyon Canoe Company situation from Chapter 6. Canyon Canoe
Company has decided to open a new checking account at River Nations Bank during March
2019. Canyon Canoe Company’s March Cash T-account for the new cash account from its
general ledger is as follows:
Canyon Canoe Company’s bank statement dated March 31, 2019, follows:
Requirements
1. Prepare the bank reconciliation at March 31, 2019.
2. Journalize any transactions required from the bank reconciliation.
3. Compute the adjusted account balance for the Cash T-account, and denote the balance as
End. Bal. Does the adjusted balance of the Cash T-account match the adjusted book balance
on the bank reconciliation?
SOLUTION
Requirement 1
