Exam 7: Internal Control and Cash

Roper Electronics received its bank statement for the month of August with an ending balance of $11,740.Roper determined that check #613 for $155 and check #601 for $420 were both outstanding.Also,a $6,900 deposit for August 30 was in transit as of the end of the month.Northern Regional Bank also collected a $5,000 note receivable on August 1 that was issued March 1.Accrued interest is $250.Northern Regional Bank charged a $35 fee for the collection service.The bank statement reveals a bank service charge of $20.A customer check for $68 was returned with the bank statement marked "NSF." The ending balance of the Roper cash account is $12,938. ​ Prepare a bank / account reconciliation and any necessary journal entries for the reconciliation.

The following procedures were recently implemented at the Health Station,Inc.For each procedure,indicate whether the internal control over cash represents (1)a strength or (2)a weakness.If it is a weakness,please explain why. ​ (a)All mail is opened by the mail clerk,who forwards all cash remittances to the cashier.The cashier prepares a listing of the cash receipts and forwards a copy of the list to the accounts receivable clerk for recording in the accounts. ​ (b)The accounts payable clerk prepares a voucher for each disbursement.The voucher along with the supporting documentation is forwarded to the treasurer's office for approval. ​ (c)At the end of each day,all cash receipts are placed in the bank's night depository. ​ (d)The bank reconciliation is prepared by the cashier,who works under the supervision of the treasurer.

The control environment in an internal control structure is the overall attitude of management and employees about the importance of internal control.

When the voucher system is used,the amount due on each voucher represents the credit balance of an account payable if the voucher is in full payment to a creditor.

The following data were gathered to use in reconciling the bank account of Savannah Company: ​ What is the adjusted balance on the bank reconciliation?

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.

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. Journal

Most companies who have several bank accounts,petty cash,and cash on hand,would list each separately on the balance sheet.

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.

A backlog in recording transactions is an example of a warning sign from the accounting system.

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.

A check for $342 was erroneously charged by the bank as $432.In order for the bank reconciliation to balance,you must add $90 to the bank statement balance.

On August 3,Sonar Sales decides to establish a $275.00 Petty Cash Account to relieve the burden on Accounting. ​ (a)Journalize the establishment of this fund. ​(b)On August 11,the petty cash fund has receipts for mail and postage of $124.75,contributions and donations of $53.25,meals and entertainment of $63.85,and $32.75 in cash.Journalize the replenishment of the fund. (c)On August 12,Sonar Sales decides to increase petty cash to $400.00.Journalize this transaction.

Procedures designed to protect cash from theft and misuse from the time it is received until it can be deposited in a bank are called

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

Journalize the entries to record the following: ​ ​ Journal

Thompson Corporation gathered the following reconciling information in preparing its October bank reconciliation: ​ Using the above information,determine the cash balance per books (before adjustments)for Thompson Corporation.

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

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

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