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