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Weygandt, Accounting Principles, 12e
Chapter Eight
Solutions to Challenge Exercises
Challenge Exercise 8-1 – Solution
a)
May 1 Petty Cash ........................................................................... 150.00
Cash ........................................................................ 150.00
June 1 Delivery Expense ................................................................. 31.25
Postage Expense................................................................. 39.00
July 10 Petty Cash ........................................................................... 50.00
Cash .......................................................................... 50.00
(b) The activities in a petty cash system and the related principles are:
(1) Establishing the fund. * Establishment of responsibility for custody of fund.
(2) Making payments from the fund. * Documentation procedures because the custodian must
Challenge Exercise 8-2 – Solution
(a) TWO GUYS VIDEO COMPANY
Bank Reconciliation
July 31
Cash balance per bank statement ................................................................. $7,363
Add: Deposits in transit ............................................................................... 2,200
Bank error ........................................................................................ 700
10,050
Less: Bank service charge ............................................................................ 22
NSF check ......................................................................................... 350
(b) July 31 Cash ....................................................................................... 1,266
Miscellaneous Expense ............................................................ 20
Notes Receivable ............................................................ 1,250
Interest Revenue ............................................................ 36
