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Exam 8: Fraud, Internal Control, and Cash

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Question 1

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Ella Company wrote checks totaling $36140 during October and $37030 during November. $34280 of these checks cleared the bank in October and $34640 cleared the bank in November. What was the amount of outstanding checks on November 30?

A) $2390
B) $1860
C) $4250
D) $890

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Question 2

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In preparing its bank reconciliation for the month of April 2016 Leno Inc. has available the following information. $\begin{array}{lr}\text { Balance per bank statement, } 4 / 30 / 16 & \$ 76,800 \\\text { NSF check returned with } 4 / 30 / 16 \text { bank statement } & 940 \\\text { Deposits in transit, } 4 / 30 / 16 & 9,000 \\\text { Outstanding checks, } 4 / 30 / 16 & 9,300 \\\text { Bank service charges for April } & 60\end{array}$ What should be the adjusted cash balance at April 30 2016?

A) $75100.
B) $75800.
C) $75920.
D) $76500.

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Question 3

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Having one person responsible for the related activities of ordering merchandise receiving goods and paying for them

Under a voucher system a prenumbered voucher is prepared for every

A bank reconciliation is generally prepared by the bank and sent to the depositor along with cancelled checks.

Match the appropriate cash disbursements procedure described below with the internal control principle.

Employees who handle cash should be ______________ in order to protect against misappropriation of assets by dishonest employees.

Internal control over cash disbursements is more effective when payments are made by ______________ rather than by ______________.

White Water Kayak Company's bank statement for the month of September showed a balance per bank of $6900. The company's Cash account in the general ledger had a balance of $5573 at September 30. Other information is as follows: (1) Cash receipts for September 30 recorded on the company's books were $5850 but this amount does not appear on the bank statement. (2) The bank statement shows a debit memorandum for $25 for check printing charges. (3) Check No. 119 payable to Blacque Company was recorded in the cash payments journal and cleared the bank for $236. A review of the accounts payable subsidiary ledger shows a $27 credit balance in the account of Blacque Company and that the payment to them should have been for $263. (4) The total amount of checks still outstanding at September 30 amounted to $4800. (5) Check No. 148 was correctly written and paid by the bank for $408. The cash payment journal reflects an entry for Check No. 148 as a debit to Accounts Payable and a credit to Cash in Bank for $480. (6) The bank returned an NSF check from a customer for $340. (7) The bank included a credit memorandum for $2670 which represents collection of a customer's note by the bank for the company; principal amount of the note was $2600 and interest was $70. Interest has not been accrued. Instructions (a) Prepare a bank reconciliation for White Water Kayak Company at September 30. (b) Prepare any adjusting entries necessary as a result of the bank reconciliation.

Control over cash disbursements is improved if major expenditures are paid by check.

Koffoed Inc. had the following bank reconciliation at March 31 2016: $\begin{array}{lr}\text { Balance per bank statement, } 3 / 31 / 16 & \$ 37,200 \\\text { Add: Deposit in transit } & \underline{6,200} \\&{43,400}\\\text { Less: Outstanding checks } & 7,600 \\\text { Balance per books, } 3 / 31 / 16 & \$ 35,800 \\\text { lata per bank for the month of April 2016 follow: } & \\\text { Deposits } & \$ 47,600 \\\text { Disbursements } & 47,900\end{array}$ All reconciling items at March 31 2016 cleared the bank in April. Outstanding checks at April 30 2016 totaled $7000. There were no deposits in transit at April 30 2016. What is the cash balance per books at April 30 2016?

The cash account shows a balance of $42000 before reconciliation. The bank statement does not include a deposit of $9200 made on the last day of the month. The bank statement shows a collection by the bank of $4960 and a customer's check for $1100 was returned because it was NSF. A customer's check for $1380 was recorded on the books as $1830 and a check written for $318 was recorded as $381. The correct balance in the cash account was

Sylvan Company wrote checks totaling $26520 during October and $25779 during November. $23460 of these checks cleared the bank in October and $26330 cleared the bank in November. What was the amount of outstanding checks on November 30?

Identify whether each of the following items would be (a) added to the book balance (b) deducted from the book balance in a bank reconciliation (c) added to the bank balance or (d) deducted from the bank balance. 1. Deposits in transit 2. Bank service charge 3. Collection of note and interest by bank on company's behalf 4. NSF check 5. Outstanding checks

The cash records of Jasmin Company show the following four situations. 1. The June 30 bank reconciliation indicated that deposits in transit total $2110. During July the general ledger account Cash shows deposits of $23620 but the bank statement indicates that only $23400 in deposits were received during the month. 2. The June 30 bank reconciliation also reported outstanding checks of $1250. During the month of July Jasmin Company books show that $25800 of checks were issued. The bank statement showed that $24600 of checks cleared the bank in July. 3. In September deposits per the bank statement totaled $40100 deposits per books were $38100 and deposits in transit at September 30 were $2900. 4. In September cash disbursements per books were $36550 checks clearing the bank were $37500 and outstanding checks at September 30 were $3200. There were no bank debit or credit memoranda. No errors were made by either the bank or Jasmin Company. Instructions Answer the following questions. (a) In situation (1) what were the deposits in transit at July 31? (b) In situation (2) what were the outstanding checks at July 31? (c) In situation (3) what were the deposits in transit at August 31? (d) In situation (4) what were the outstanding checks at August 31?

Proper control for over-the-counter cash receipts includes

The cash balance per books for Potter Company on September 30 2015 is $10740.93. The following checks and receipts were recorded for the month of October 2015: In addition the bank statement for the month of October is presented below: Check No. 28 was correctly written for $707.62 for a payment on account. The NSF check was from M. Short a customer in settlement of an accounts receivable. An entry had not been made for the NSF check. The credit memo is for the collection of a note receivable including interest of $80 which has not been accrued. The bank service charge is $25.00. Instructions (a) Prepare a bank reconciliation at October 31. (b) Prepare the adjusting journal entries required by the bank reconciliation.

Which one of the following items would not be considered cash?

The use of remittance advices for mail receipts is an example of

Notification by the bank that a deposited customer check was returned NSF requires that the company make the following adjusting entry: