Exam 7: Internal Control and Cash

On April 2, Granger Sales decides to establish a $125.00 petty cash fund to relieve the burden on Accounting.​ (a) Journalize the establishment of the fund.(b) On April 10, the petty cash fund has receipts for mail and postage of $43.50, contributions and donations of $29.50, meals and entertainment of $38.25, and $13.55 in cash. Journalize the replenishment of the fund. Record any missing funds in the cash short and over account.(c) On April 11, Granger Sales decides to increase petty cash to $200.00. Journalize this event.

What entry is required in the company's accounts to record outstanding checks?

Credit memos from the bank

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

For each of the following, explain whether the issue would require you to prepare a journal entry for your company, assuming any original entry is correct. If an entry is required, please include it as part of your answer.(1) The bank recorded your deposit as $91 rather than the actual amount of $191.(2) Two outstanding checks amounted to $450.(3) Company check number 538 for postage was recorded incorrectly by the company bookkeeper as $50 instead of $59.(4) The bank paid a check for $500 after the company had issued a stop payment and voided the check.(5) An EFT deposit was made by one of the company's customers, Atlas Design, for merchandise received. The sale had previously been recorded when shipped and was equal to the payment amount of $125.

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

If the balance in Cash Short and Over at the end of a period is a credit, it indicates that cash shortages have exceeded cash overages for the period.

Which of the following statements is true about the Days' Cash on Hand ratio?

Selected financial statement data for two years ended December 31 for Carey Co. follow. Assets are reported at their year-end value.​ Calculate the days' cash on hand for the two years, rounding all calculations to one decimal place.

Minor Company had checks outstanding totaling $19,200 on its April bank reconciliation. In May, Minor Company issued checks totaling $64,900. The May bank statement shows that $47,600 in checks cleared the bank in May. A check from one of Minor Company's customers of $300 was also returned marked "NSF." The amount of outstanding checks on Minor Company's May bank reconciliation should be

The amount of the outstanding checks is included on the bank reconciliation as a(n)

A firm's internal control environment is not influenced by

Internal control does not consist of policies and procedures that

A compensating balance occurs when a bank may require a company to maintain a maximum cash balance.

Match each item to a bank statement adjustment, a company books adjustment, or either. -Note collected by the bank A)bank statement adjustment B)company books adjustment C)either

In preparing a bank reconciliation, the amount of outstanding checks is added to the balance per bank statement.

Identify each of the following reconciling items as (a) an addition to the cash balance according to the bank statement, (b) deduction from the cash balance according to the bank statement, (c) an addition to the cash balance according to the company's records, or (d) a deduction from the cash balance according to the company's records. Assume that none of the transactions reported by bank debit and credit memos have been recorded by the company. Also, indicate by writing "entry" by those items that will require a journal entry in the company's accounts. 1.Deposits in transit. 2.Bank service charges. 3.NSF check. 4.Outstanding checks. 5.Check for $690 incorrectly recorded by the company as $960. 6.Check for $420 incorrectly recorded by the company as $240.

EFT

When the petty cash fund is replenished, the petty cash account is credited for the total of all expenditures made since the fund was last replenished.

Money orders are considered cash.