Exam 7: Internal Control and Cash

A petty cash fund was originally established with a cheque for $150. OnDecember 31, you find the following items in the petty cash fund: Prepare the general journal entry to record the replenishment of the petty cash fund on December 31.

The following information refers to Annie's Attic and competitors in the antiques business. Information:Comment on the relative liquidity positions of the companies.

At the end of the day, the cash register shows a balance of $635. The cash drawer has a balance of $650. The difference of $15 should be debited to miscellaneous expense.

Outstanding cheques are cheques the bank has paid and deducted from the customer's account during the month.

A good system of internal control:

On September 1, Bartoletti Company established a petty cash fund for $100. OnSeptember 10, the petty cash fund was replenished when there was $16.50 on hand and there were petty cash receipts for office supplies, $27;transportation-in, $32; and postage, $21.50. On September 15, the petty cashfund was increased to $125. Record these transactions in general journal format.

Credit cards do not remove the risk of bad debts to the business accepting payment by credit card.

The entry to increase the balance in petty cash from $50 to $75 would include a credit to Petty Cash of $25.

Discuss how banking activities promote the control of cash.

An error made by the bank should result in a reconciling item on the book side of a bank reconciliation.

Omega Supply's current ratio is 2 to 1. Its quick ratio is .75 to 1. Omega Supply has a good credit risk because the ratios reveal no liquidity problem.

Make the entry to replenish the petty cash fund at the end of January.

J.C. Penney's total quick assets were $5,888 million. Its current assets were $11,700. Its current liabilities were $8,000. The quick ratio is:

In reimbursing the petty cash fund:

Credit card expense may be classified as:

Banks normally use a flat rate fee for the processing of debit card transactions and a percentage fee for the processing of credit card transactions.

Z-Mart's quick assets are $147,000. With current liabilities of $143,000, Z-Mart's quick ratio is 1.03 to 1.

A credit memorandum from the bank may be used as:

A cheque that was outstanding on last month's bank reconciliation was not among the cancelled cheques returned by the bank this month. As a result, in preparing thismonth's reconciliation, the amount of this cheque should be:

Annie's Attic reported the following information for September 30. Instructions:(1)Explain the purpose of the quick ratio.(2)Calculate the quick ratio to four decimals.(3)What does the quick ratio reveal about Annie's Attic?