Exam 7: Internal Control and Cash

If an adjustment for an NSF check is made in a company's bank reconciliation, then the company must have written a bad check during the month.

The cash account for Santiago Co. on May 31 indicated a balance of $20,915. The Maybank statement indicated an ending balance of $25,645. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items: ​ (a) Prepare a bank reconciliation as of May 31. (b) Journalize the necessary entries. (c) If a balance sheet were prepared for Santiago Co. on May 31, what amount should be reported for cash?

A voucher is a written authorization to make a cash payment.

Accompanying a bank statement for Marsh Land Properties is a credit memo for payment on a $15,000 1-year note receivable and $900 of interest collected by the bank. Marsh Land Properties had been notified by the bank at the time of collection, but had made no entries. Journalize the entry that should be made by Marsh Land to bring the accounting records up to date.

The following data were gathered to use in reconciling the bank account of Savannah Company: Balance per bank \ 16,750 Balance per company records 16,125 Bank service charges 80 Deposit in transit 2,195 NSF check 950 Outstanding checks 3,850 ​ What is the adjusted balance on the bank reconciliation?

Entries are made to the petty cash account when

Which is the better choice for evaluating across companies: Days' Cash on Hand or the amount in the company's Cash account?

Which of the following would be subtracted from the balance per bank on a bank reconciliation?

Journalize the entries to record the following: ​ ​ Journal

Accompanying the bank statement was a credit memo for a short-term note collected by the bank for the company. This item is a(n)

The bank reconciles its statement to the company's records.

Match the following elements of internal control: -control environment

The following data were gathered to use in reconciling the bank statement of Build-A-Lot: Balance per bank \ 14,355 Balance per company records 14,010 Bank service charges 80 Deposits in transit 4,100 NSF checks 775 Outstanding checks 5,300 ​ (1) What is the adjusted balance on the bank reconciliation? (2) Journalize any necessary entries for Build-A-Lot based on the bank reconciliation.

In preparing a bank reconciliation, the amount indicated by a debit memo for bank service charges is added to the balance per company's records.

Rodgers Company gathered the following reconciling information in preparing its May bank reconciliation. Calculate the adjusted cash balance per books on May 31. Cash balance per books, 5/31 \ 5,400 Deposits in transit 375 Notes receivable and interest collected by bank 650 Bank charge for check printing 40 Outstanding checks 2,400 NSF check 140

For a strong internal control system over cash, it is important to have the duties related to cash receipts and cash payments divided among different employees.

Match the following elements of internal control: -risk assessment

A petty cash fund is used to pay relatively large amounts.

Consider the following information taken from the cash account. Assume cash payments were 80% of collections. Cash ?? Beginning balance \ 115,375 Collections ?? Disbursements \ 80,275 Ending balance How much was the beginning balance of the cash account?