Exam 8: Cash and Internal Controls

Assume that the custodian of a $450 petty cash fund has $62 in coins and currency plus $383 in receipts at the end of the month. The entry to replenish the petty cash fund will include:

Collusion is a form of fraud where individuals collaborate to thwart separation of duties.

Describe a petty cash account and its purpose.

Havermill Co. establishes a $250 petty cash fund on September 1. On September 30, the fund is replenished. The accumulated receipts on that date represent $73 for Office Supplies, $137 for merchandise inventory, and $22 for miscellaneous expenses. The fund has a balance of $18. On October 1, the accountant determines that the fund should be increased by $50. The journal entry to record the increase in the fund balance on October 1 is:

List the principles of internal control.

A voucher system establishes procedures for verifying, approving, and recording obligations for eventual cash disbursement.

A purchase order is a document the purchasing department sends to the vendor to place an order.

A bank reconciliation explains any differences between the balance of a checking account on the depositor's records and the balance reported on the bank statement.

Clayborn Company' bank reconciliation as of May 31 is shown below. Bank balance \ 15,800 Book balance \ 17,025 + Deposit in transit 5,200 Bank service fees -25 - Outstanding checks NSF returned Adjusted bank balance \ 16,400 Adjusted book balance \ 16,400 One of the adjusting journal entries that Clayborn must record as a result of the bank reconciliation includes:

Easton Co. deposits all cash receipts on the day they are received and makes all cash payments by check. At the close of business on June 30, its Cash account shows a debit balance of $60,209. Easton's June bank statement shows $58,349 on deposit in the bank. Determine the adjusted cash balance using the following information: Deposit in transit \ 3,800 Outstanding checks \ 1,925 Check printing fee, not yet recorded by company \ 15 Interest earned on account, not yet recorded by the company \ 30 The adjusted cash balance should be:

Canceled checks are checks the bank has paid and deducted from the customer's account during the period.

The Sarbanes-Oxley Act (SOX)requires managers and auditors of companies whose stock is traded on an exchange to document and certify the system of internal controls. What are the specific requirements for auditors set forth by SOX?

At the end of the day on March 15, the cash register's record shows $1,957, but the count of cash in the register is $1,965. Prepare the general journal entry to record the day's cash sales.

On a bank reconciliation, the amount of an unrecorded bank service charge should be:

Franklin Company's bank reconciliation as of August 31 is shown below. Bark balance \ 14,237 Book balance \ 13,162 + Deposit in transit 4,500 Bank service fees -50 - Outstanding checks Note collected Adjusted bank balance \ 14,837 Adjusted book balance \ 14,837 The adjusting journal entries that Clayborn must record as a result of the bank reconciliation include:

Pelcher Co. maintains a $400 petty cash fund. On January 31, the fund is replenished. The accumulated receipts on that date represent $110 for office supplies, $140 for merchandise inventory, and $70 for miscellaneous expenses. There is a cash overage of $4. Based on this information, the amount of cash in the fund before the replenishment is:

What is the purpose of the days' sales uncollected ratio?

Human fraud is driven by the triple-threat of fraud: Opportunity, collusion, and rationalization.

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

The number of days' sales uncollected is used to: