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Exam 8: Internal Control and Cash

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Question 81

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Bank customers are considered creditors of the bank so the bank shows their accounts with credit balances on the bank's records.

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Question 82

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Money market accounts, commercial paper, and U.S. Treasury bills are examples of cash equivalents.

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Question 83

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Match each item to a bank statement adjustment, a company books adjustment, or either. -Outstanding checks

Accompanying the bank statement was a credit memo for a short-term note collected by the bank for the customer. What entry is required in the company's accounts?

Journalize the entries to record the following:?June 1Established a petty cash fund of $200.30The amount of cash in the petty cash fund is now $57. The fund is replenished based on the following receipts: postage, $25; entertainment, $100; and miscellaneous, $20 .?Journal $\begin{array} { | c | c | c | c | c | } \hline \text { Date } & \text { Description } & \begin{array} { c } \text { Post. } \\\text { Ref. }\end{array} & \text { Debit } & \text { Credit } \\\hline & & & & \\\hline & & & & \\\hline & & & & \\\hline & & & & \\\hline & & & & \\\hline & & & & \\\hline & & & & \\\hline & & & & \\\hline\end{array}$

A business that requires all cash payments be made by check cannot use a petty cash system.

The bank reconciliation

A check drawn by a company for $340 in payment of a liability was recorded in the journal as $430. What entry is required in the company's accounts?

Which of the following reflects a weak internal control system?

A $200 petty cash fund has cash of $20 and receipts of $177. The journal entry to replenish the account would include a credit to

Consider the following information taken from the cash account. Assume cash payments were 80% of collections.How much was the beginning balance of the cash account? $\begin{array} { | c | l | } \hline \text { Cash } & \\\hline ? ? & \text { Beginning balance } \\\hline \$ 115,375 & \text { Collections } \\\hline ? ? & \text { Disbursements } \\\hline \$ 80,275 & \text { Ending balance } \\\hline\end{array}$

Rodgers Company gathered the following reconciling information in preparing its May bank reconciliation. Calculate the adjusted cash balance per books on May 31.? $\begin{array} { | l | r | } \hline \text { Cash balance per books, May } 31 & \$ 5,400 \\\hline \text { Deposits in transit } & 375 \\\hline \text { Notes receivable and interest collected by bank } & 650 \\\hline \text { Bank charge for check printing } & 40 \\\hline \text { Outstanding checks } & 2,400 \\\hline \text { NSF check } & 140 \\\hline\end{array}$

The amount of the "adjusted balance" appearing on the bank reconciliation as of a given date is the amount that is shown on the balance sheet for that date.

Accompanying the bank statement was a debit memo for an NSF check received from a customer. What entry is required in the company's accounts?

The following data were gathered to use in reconciling the bank statement of Build-A-Lot:​ $\begin{array} { | l | r | } \hline \text { Balance per bank } & \$ 14,355 \\\hline \text { Balance per company records } & 14,010 \\\hline \text { Bank service charges } & 80 \\\hline \text { Deposits in transit } & 4,100 \\\hline \text { NSF checks } & 775 \\\hline \text { Outstanding checks } & 5,300 \\\hline\end{array}$ Required (1) What is the adjusted balance on the bank reconciliation? (2) Journalize any necessary entries for Build-A-Lot based on the bank reconciliation.

The sum of the money on hand and petty cash receipts in a petty cash fund will always be equal to the balance in the petty cash account.

In preparing a bank reconciliation, the amount of deposits in transit is deducted from the balance per bank statement.

Which of the following is not an element of internal control?

The following selected transactions relate to cash collections for a firm that maintains a $100 change fund at all times. Present entries to record the transactions for each of the two days of cash receipts from sales. (a)Actual cash in cash register, $5,412.36; cash receipts per cash register tally, $5,413.07. (b)Actual cash in cash register, $3,712.95; cash receipts per cash register tally, $3,712.16.

The bank reconciliation is an important part of the system of internal controls.