6
Banking Procedures
and Control of Cash
ANSWERS TO DISCUSSION QUESTIONS AND
CRITICAL THINKING/ETHICAL CASE
1. A smartphone app is a tool that can be used to make deposits, check balances, and
4. Payee: person or company to whom check is payable.
5. So one doesn’t forget to reduce the checkbook balance. Check stubs aid in
updating journals.
8. Outstanding checks are subtracted from the bank balance because the bank has no
10. The adjustments to the checkbook are not yet recorded in the general journal so
they need to be put in the journal.
12. Major advantage is convenience; main disadvantage is security.
14. Disagree; Petty Cash is an asset.
15. The auxiliary petty cash record is a supplementary record that gathers information
16. Debiting totals of individual expenses updates the ledger to record where cash was
19. The question in this case is whether Sean should report to the bank that the
SOLUTIONS TO CONCEPT CHECKS
3.
Checkbook Balance
$1,900.60
Balance per Bank
$ 1,938.20
Add:
Add:
_______
Deposits in Transit
283.70
Subtotal
1,900.60
Subtotal
2,221.90
Deduct:
Deduct:
NSF Check
Outstanding Checks
394.10
Charge
72.80
Reconciled Balance
$ 1,827.80
Reconciled Balance
$ 1,827.80
4. a. 1,2,4
5.
Office Supplies Expense
4.70
6.
Petty Cash
8.75
SOLUTIONS TO SET A EXERCISES
6A-1.
Checkbook Balance
$ 1,493
Balance per Bank
$ 1,450
_____
Deposits in Transit
Deduct:
Deduct:
NSF Check
Outstanding Checks
Charge
Reconciled Balance
$ 1,412
Reconciled Balance
$ 1,412
Feb.
28
Service Charge Expense
6
0
00
Accounts Receivable
2
1
6A-2.
Oct.
1
Petty Cash
1
0
1
00
Cash
1
0
1
00
Establishment
31
Donations Expense
1
5
Postage Expense
1
8
00
Office Supplies Expense
3
0
00
Miscellaneous Expense
2
4
8
7
6A-3.
Oct.
31
Donations Expense
1
5
00
CHECKBOOK BALANCE
BALANCE PER BANK
6A-4.
Donations Expense
1
5
00
6A-5.
Beg. Change Fund
$ 24
SOLUTIONS TO SET B EXERCISES
6B-1.
Checkbook Balance
$ 1,971
Balance per Bank
$ 1,500
____
Deposits in Transit
Deduct:
Deduct:
NSF Check
$58
Outstanding Checks
642
Charge
Reconciled Balance
$ 1,858
Reconciled Balance
$ 1,858
Accounts Receivable
5
8
6B-2.
Dec.
1
Petty Cash
1
0
8
00
Cash
1
0
8
00
Establishment
31
Donations Expense
1
5
Postage Expense
1
3
00
Office Supplies Expense
2
6
00
Miscellaneous Expense
1
9
7
3
6B-3.
Dec.
31
Donations Expense
1
5
00
CHECKBOOK BALANCE
BALANCE PER BANK
6B-4.
Dec.
31
Donations Expense
1
5
00
6B-5.
Beg. Change Fund
$ 26
+
Cash Register Total
+1,204
2
0
4
SOLUTIONS TO SET A PROBLEMS
PROBLEM 6A-1
Checkbook Balance
$ 8,231
Balance per Bank
$ 7,600
Proceeds of note
939
Deposits in Transit
Subtotal
9,170
Subtotal
1,300
GENERAL JOURNAL
Date
201X
Account Titles and Description
PR
Dr.
Cr.
Jul.
31
Cash
9
3
9
00
Miscellaneous Expense
1
1
00
Equipment
4
0
00
Miscellaneous Expense
6
0
00
1
3
0
0
PROBLEM 6A-2
Checkbook Balance
$ 5,760
Balance per Bank
$ 6,160
____
Deposits in Transit
Subtotal
$ 5,760
Subtotal
$ 8,160
NSF Check
Outstanding Checks
CHECKBOOK BALANCE
BALANCE PER BANK
CHECKBOOK BALANCE
BALANCE PER BANK
PROBLEM 6A-2 (CONTINUED)
GENERAL JOURNAL
Date
201X
Account Titles and Description
PR
Dr.
Cr.
1
3
0
PROBLEM 6A-3
GENERAL JOURNAL
PAGE 4
Date
201X
Account Titles and Description
PR
Dr.
Cr.
Apr.
1
Petty Cash
1
4
0
00
Cash
1
4
0
00
Establishment, Check 14
Cash
1
5
0
00
Accounts Payable
7
0
0
00
7
0
0
00
Paid Rabbit Corp., Check 16
Office Equipment
8
0
0
00
Cash
8
0
0
00
Office Supplies Expense
3
3
00
Miscellaneous Expense
1
5
00
Cash
8
6
00
Replenishment, Check 18
6-10
PROBLEM 6A-3 (CONCLUDED)
JUBILANT CO.
AUXILIARY PETTY CASH RECORD
Category of Payment
Replenishment
Balance (New)
30
00
4
5
Ending Balance
00
6
1
00
6
1
Office Supplies
Office Supplies
Postage
Donations
Ending Balance
8
17
26
PROBLEM 6A-4
GENERAL JOURNAL
PAGE 2
Date
201X
Account Titles and Description
PR
Dr.
Cr.
Oct.
1
Petty Cash
2
2
0
00
2
2
0
Postage Expense
5
4
00
Delivery Expense
3
9
00
Miscellaneous Expense
1
0
00
Cash Short and Over
1
3
4
PROBLEM 6A-4 (CONCLUDED)
BURBANK COMPANY
AUXILIARY PETTY CASH RECORD
00
0
2
2
00
00
0
6
2
8
2
Ending Balance
2
1
2
1
Postage
SOLUTIONS TO SET B PROBLEMS
PROBLEM 6B-1
Checkbook Balance
$ 8,136
Balance per Bank
$ 7,700
Add:
Add:
Proceeds of Note
1,084
Deposits in Transit
Subtotal
$ 9,220
Subtotal
$ 9,400
Deduct:
Deduct:
Transaction
$1,210
Check No. 122
1,250
Reconciled Balance
$ 7,970
Reconciled Balance
$ 7,970
GENERAL JOURNAL
Date
201X
Account Titles and Description
PR
Dr.
Cr.
Jul.
31
Cash
1
0
8
4
00
Miscellaneous Expense
6
00
* Service Charge Expense could be used instead.
PROBLEM 6B-2
Checkbook Balance
$ 6,000
Balance per Bank
$ 5,105
____
Deposits in Transit
Subtotal
$ 6,000
Subtotal
$ 7,005
Deduct:
Deduct:
NSF Check
Outstanding Checks
Reconciled Balance
$ 4,645
Reconciled Balance
$ 4,645
CHECKBOOK BALANCE
BALANCE PER BANK
CHECKBOOK BALANCE
BALANCE PER BANK