Exam 7: Internal Control and Cash

Match each item to a bank statement adjustment, a company books adjustment, or either. -Interest revenue

In establishing a petty cash fund, a check is written for the amount of the fund and is recorded as a debit to Accounts Payable and a credit to Petty Cash.

Sarbanes-Oxley's purpose is to maintain public confidence and trust in the financial reporting of companies.

A customer's check received in settlement of an account receivable is considered cash.

The actual cash received during the week ended October 31 for cash sales was $23,447 and the amount indicated by the cash register total was $23,457. Journalize the entry to record the cash receipts and cash sales. Journal Date Description P ost. Ref. Debit Credit

Green Valley Bank sent Comstock Industries its end-of-month bank statement for July. The end of month balance by the bank is $11,237. The statement shows that a deposit for $4,250 is in transit at the end of the statement period. The statement also revealed that checks for $87, $105, and $95 are outstanding. Green Valley collected a $4,000 note receivable plus $120 of interest revenue. The bank charges $20 for the collection service. The bank charges a monthly account fee of $35. The end-of-month balance per company books is $11,135. ​ (a) Prepare a bank/account reconciliation. (b) Write any necessary journal entries for the reconciliation. (c) If the balance sheet were prepared for Comstock Industries on July 31, what amount should be reported for cash?

The type of account and normal balance of Petty Cash is a(n)

During a bank reconciliation process,

Match each item to a bank statement adjustment, a company books adjustment, or either. -Error in recording a check

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

A check drawn by a company for $340 in payment of a liability was recorded in the journal as $430. This item would be included on the bank reconciliation as a(n)

Stephanie Jo Company established a petty cash fund of $300 on May 1. At the end of the month, the petty cash fund has $42 in cash and receipts for postage, $39; entertainment, $146; and office supplies of $70. Prepare the needed journal entries, recording any discrepancy in the cash short and over account. ​ Journal Date Description Post. Ref. Debit Credit

Which of the following would not be included with the cash and cash equivalents on the balance sheet?

Jamison Company gathered the following reconciling information in preparing its June bank reconciliation: Cash balance per bank, 6/30 \ 13,000 Note receivable collected by bank 4,000 Outstanding checks 7,000 Deposits in transit 2,500 Bank service charge 35 NSF check 1,900 Using the above information, determine the cash balance per books (before adjustments) for Jamison Company.

Journalize the entries to record the following: ​ Journal

Nebraska Fields Co. records all cash receipts from data on the cash register tapes. Nebraska discovered during June that one of its sales clerks had stolen some cash. However, the amount is not known. The sales clerk was responsible for taking cash deposits to the bank. To determine the amount stolen, the following data have been obtained for June: ​ Cash in bank according to the general ledger $ 21,530 Cash according to the June 30 bank statement 25,620 Outstanding checks at June 30 4,800 Bank service charge for June 30 Notes receivable collected by bank 2,000 Interest collected on note receivable 80 ​ No deposits were in transit on June 30. ​ (a) Determine the amount of cash stolen by the clerk. (b) Suggest accounting controls that would have prevented or detected the theft. ​

Hanna Co. sells art supplies and also has a custom framing department. Only two employees are trained to complete custom framing orders. They place the orders for the supplies they need. Also they are the only ones who take customer orders, as the ordering process is fairly technical. For the past several years, custom framing has been a very profitable part of Hanna Co.'s business. However, the financial reports for the most recent period show a substantial drop in profitability for custom framing. Upon investigation, it was determined that the supplies being used in custom framing had increased measurably. However, the sales generated did not support the amount of supplies being used. Further investigation discovered that one of the custom framing specialists had arranged for a co-conspirator to bring in orders and have them filled. The co-conspirator paid for the orders in cash, but the sales were not recorded in the accounting system. The two then sold the framed art through another business. What general internal control weaknesses contributed to the fraud?

Internal control is enhanced by separating the control of a transaction from the record-keeping function.

A check drawn by a company in payment of a voucher for $965 was recorded in the journal as $695. This item would be included in the bank reconciliation as a(n)

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