Exam 8: Internal Control and Cash

In the following situation, which internal control procedure needs strengthening? Hofstra Services hired a new clerk to keep custody of and maintain all the equipment in the equipment yard. That employee has not yet been adequately trained on the maintenance needs of the equipment.

Table 8-1 The petty cash fund had the following petty cash ticket: Toner for a printer \ 42 Freight to deliver goods sold 39 Freight on inventory purchased. 112 Miscellaneous expense 10 Postage expense -Refer to Table 8-1. Assume that the business has established a petty cash fund in the amount of $250 and that the amount of cash in the fund at the time of replenishment is $25. The business uses a periodic inventory system. Prepare the entry to replenish the fund on February 28.

List at least five characteristics of an effective system of internal control. What is one inherent limitation/weakness of any system of internal control?

Prepare journal entries for the following independent transactions: a)Cash sales for the day based on the cash register tape amounted to $19,559.40. Cash receipts for the day amounted to $19,640.50. b)Cash sales for the day according to the cash register tape amounted to $11,950.38. Cash receipts for the day amounted to $11,942.59.

The journal entry to record an NSF cheque from a customer would require a:

Safeguarding the assets the business uses in its operations is the sole purpose of an effective system of internal control.

The cash register in an internal control device.

Interest expense appears on a bank reconciliation as a(n):

A petty cash fund was established with a $300 balance. It currently has cash of $77 and petty cash tickets totaling $222 for travel expense. Please provide the journal entry to record the replenishment of the account. \nobreakspace\nobreakspace\nobreakspace\nobreakspace\nobreakspace\nobreakspace\nobreakspace\nobreakspace\nobreakspace\nobreakspace\nobreakspace\nobreakspace\nobreakspace\nobreakspace\nobreakspace \nobreakspace\nobreakspace\nobreakspace\nobreakspace\nobreakspace\nobreakspace \nobreakspace\nobreakspace\nobreakspace\nobreakspace\nobreakspace\nobreakspace\nobreakspace

Classify each of the following reconciling items of the Tic and Tac Company as: -Deposits in transit ________

Prepare any necessary journal entries based on the following data regarding the bank reconciliation prepared by Macky Park on Nov. 30, 2019. a)Outstanding cheques amount to $6,950. b)The service charges for November amount to $55. c)Cheque #443 for $480 for the cash purchase of office supplies was erroneously recorded by the bookkeeper as $48. d)The bank erroneously credited Macky Park's account for $300 for a deposit made by Lacky Park. e)A deposit ticket correctly prepared for $100 appeared on the bank statement as a deposit for $1,000. f)Cheque #650 for $4,000 for Rent expense was erroneously recorded by the bookkeeper as $400. g)A customer's cheque for $950 was returned with the bank statement and stamped NSF.

Classify each of the following reconciling items of the Tic and Tac Company as: -Bookkeeper failed to record a cheque that was returned with the bank statement ________

A cheque written for $86.30 in payment of an account was recorded on the books as $68.30. On a bank reconciliation, this will appear as a(n):

The following data have been gathered for Reynolds Company to assist you in preparing the July 31, 2019, bank reconciliation: a)The July 31 bank balance was $4,000. b)The bank statement included $30 of service charges. c)There was an EFT deposit of $900 on the bank statement for the monthly rent due from a tenant. d)Cheques #541 and #543 for $205 and $320, respectively, were not among the cancelled cheques returned with the statement. e)The July 31 deposit of $4,435 did not appear on the bank statement. f)The bookkeeper had erroneously recorded a $500 cheque as $5,000. The cheque was written to a vendor to pay off an accounts payable. g)Included with the cancelled cheques was a cheque written by another company for $200, which was deducted from Reynolds Company's account. h)The bank statement included an NSF cheque written by Maxie Company for a $460 payment on account. i)The cash account showed a balance of $3,200 on July 31. Prepare the July 31, 2019, bank reconciliation for Reynolds Company.

The following data are available for Matheson Avenue Retailers for April: Book balance, April 30 \ 1,400 Service charges 20 Interest revenue 800 Note collected by bank 1,000 Cheque returned marked NSF 300 What is Matheson's adjusted book balance on April 30 from the above data?

If the bank mistakenly recorded a $71 deposit as $17, the error would be shown on the bank reconciliation as a:

Classify each of the following reconciling items of the Tic and Tac Company as: -Bank charge for printing cheques ________

All of the following are parts of the internal control characteristic referred to as separation of duties except separation of:

Define internal control. Who is responsible for establishing an effective system of internal control? What is the major constraint of any system of internal control?

The design of the system of internal controls is the responsibility of the external auditor.