Exam 7: Internal Control and Cash

Journalize the entries to record the following: June 1 Established a petty cash fund of $200. 30 The amount of cash in the petty cash fund is now $57. The fund is replenished based on the following receipts: postage, $25; entertainment, $100; and miscellaneous, $20. Record any missing funds in the cash short and over account. Journal

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

Bank reconciliation information for Kaden Co. for May 31 is as follows: ​ (a) The bank statement balance is $\$ 2,936$ . (b) The cash account balance is $\$ 3,194$ . (c) Outstanding checks amounted to $\$ 465$ . (d) Deposits in transit are $\$ 655$ . (e) The bank service charge is $\$ 50$ . (f) A check for $\$ 97$ for supplies was recorded as $\$ 79$ in the ledger. ​ Record the appropriate journal entry for Kaden Co.

On April 3, Snappy Sales decides to establish a $135.00 petty cash fund to relieve the burden on Accounting. ​ ​ ​

Cash equivalents include

Expenditures from a petty cash fund are documented by a petty cash receipt.

The actual cash received during the week ended June 6 for cash sales was $8,276 and the amount indicated by the cash register total was $8,262. Journalize the entry to record the cash receipts and cash sales. Journal Date Description P ost. Ref. Debit Credit

A business that requires all cash payments be made by check can not use a petty cash system.

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

The following information is from Madison Corporation's accounting records for May. Check #3269 was returned as a double payment and voided. Checks that have not cleared the bank include #3252, #3260, and series #3275-3278. ​ In addition to the above list of the checks, Madison had check #2264 for $32.98 and check #2655 for $45.99 outstanding previously that have not cleared. 1. Create an outstanding checks list for Madison at the end of May. 2. What is the total amount of checks that cleared the bank (written in May)?

Money orders are considered cash.

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.

Accompanying the bank statement was a debit memo for an NSF check received from a customer. This item would be included on the bank reconciliation as a(n)

Receipts from cash sales of $3,200 were recorded incorrectly in the cash receipts journal as $2,300. This item would be included on the bank reconciliation as a(n)

There are three internal control objectives and they are to safeguard the company's reputation, ensure accurate financial reports, and ensure compliance with applicable laws.

If the balance in Cash Short and Over at the end of a period is a credit, it should be reported as an "other income" item on the income statement.

In preparing a bank reconciliation, the amount of a canceled check omitted from the journal is added to the balance per company's records.

The bank statement for Gatlin Co. indicates a balance of $7,735 on June 30. After the journal entries for June had been posted, the cash account had a balance of $4,098. ​ (a) Cash sales of $\$ 742$ had been erroneously recorded in the cash receipts journal as $\$ 724$ . (b) Deposits in transit not recorded by bank, $\$ 425$ . (c) Bank debit memo for service charges, $\$ 35$ . (d) Bank credit memo for note collected by bank, $\$ 2,475$ including $\$ 75$ interest. (e) Bank debit memo for $\$ 256 \mathrm { NSF }$ (not sufficient funds) check from Janice Smith, a customer. (f) Checks outstanding, $\$ 1,860$ . ​ Record the appropriate journal entries that would be necessary for Gatlin Co.

Accompanying the bank statement was a debit memo for bank service charges. What entry is required in the company's accounts?