Exam 6: Reporting and Analyzing Cash and Internal Controls

On November 1,a company established a $90 petty cash fund.On November 12,the petty cash fund contains $3 in cash and the following paid petty cash receipts: transportation-in on merchandise inventory $14.25; postage,$34.50; and office supplies,$36.Give the entry to reimburse the fund and to increase its amount to $150 on November 12.

Cash receipts by mail require only two people: One to open the mail and a second person to deposit the cash in the bank and record the cash receipt in the accounting records.

The document,also known as the check authorization,that is a checklist of steps necessary for approving an invoice for approval and payments is the

The _________________________ is also called the check authorization.

Discuss the purpose of a bank reconciliation.

Brouski had $750 million in accounts receivable and $2,900 million in net sales for the current period.Its days' sales uncollected ratio equals 3.9 days.

Controls of cash disbursements are important for companies as most large thefts occur from payment of fictitious invoices.

Internal control devices for banking activities include signature cards,deposit tickets,checks and bank statements.

A ________ is a document signed by the depositor instructing the bank to pay a specified amount of money to a designated recipient.

The days' sales uncollected ratio measures a company's ability to manage its debt.

Triple Company's accountant made an entry that included the following items: debit postage expense $12.42; debit office supplies expense $27.33,debit to cash over/short $2.19.If the original amount in petty cash is $320,how much was the credit to cash for the reimbursement?

The following information is available to reconcile Sleepy Time Bedding's book balance of cash with its bank statement cash balance as of July 31: a. On July 31 , the compary's Cash accourt has a $\$ 25,862$ debit balarce, but its July barik staternerit shows a $\$ 28,177$ cash balarice. b. Check No. 1531 for $\$ 1,520$ and Check No. 1540 for $\$ 752$ were outstandirig on the Jurne 30 bark reconciliation. Check No. 1540 is listed with the July carnceled checks, but Check No. 1531 is not. Also, Check No. 1565 for $\$ 536$ ard Check No. 1569 for $\$ 2,288$ , both writtenl irl July, are not arnong the carnceled checks on the July 31 staternent. c. In comparing the carnceled checks on the bark staternent with the entries in the accounting records, it is found that Check No. 1556 for July rent was cortectly written ard drawn for $\$ 1,240$ but was erroneously entered in the accourting recards as $\$ 1,230$ . d. A credit memorardurn enclosed with the July barik statement indicates the bark collected $\$ 9,500$ cash on a noniraterest-bearing note for Sleepy Tirne Beddirg, deducted a $\$ 48$ collection fee, and credited the remainder to its account. Sleepy Time Bedding had not recorded this event before receiving the statement. e. A debit menernorandurn for $\$ 805$ lists a $\$ 795 \mathrm { NSF }$ check plus a $\$ 10 \mathrm { NSF }$ charge. The check had been received from a customer, Evarn Shaw. Sleepy Time Bedding has not yet recorded this check as NSF. f. Enclosed with the July statement is a $\$ 14$ debitmemorandum for barik services. It has not yet been recorded because no previous notification had been received. e. Sleepy Time Bedding July 31 daily cash receipts of $\$ 10,652$ were placed in the bark's right depository on that date, but do not appear on the July 31 bark statement. a. On July 31 , the compary's Cash accourt has a $\$ 25,862$ debit balarce, but its July barik staternerit shows a $\$ 28,177$ cash balarice. b. Check No. 1531 for $\$ 1,520$ and Check No. 1540 for $\$ 752$ were outstandirig on the Jurne 30 bark reconciliation. Check No. 1540 is listed with the July carnceled checks, but Check No. 1531 is not. Also, Check No. 1565 for $\$ 536$ ard Check No. 1569 for $\$ 2,288$ , both writtenl irl July, are not arnong the carnceled checks on the July 31 statement. c. In comparing the carnceled checks on the bark staternent with the entries in the accounting records, it is found that Check No. 1556 for July rent was cortectly written ard drawn for $\$ 1,240$ but was erroneously entered in the accourting recards as $\$ 1,230$ . d. A credit memorardurn enclosed with the July barik statement indicates the bark collected $\$ 9,500$ cash on a noniraterest-bearing note for sleepy Tirne Beddirg, deducted a $\$ 48$ collection fee, and credited the remainder to its accourt. Sleepy Time Bedding had not recorded this event before receiving the staternent. e. A debit mennorardurn for $\$ 805$ lists a $\$ 795 \mathrm { NSF }$ check plus a $\$ 10 \mathrm { NSF }$ charge. The check had been received from a customer, Evarl Shaw. Sleepy Time Bedding has not yet recorded this check as NSF. f. Enclosed with the July statement is a $\$ 14$ debitmemorandum for barik services. It has not yet been recorded because no previous notification had been received. g. Sleepy Time Bedding July 31 daily cash receipts of $\$ 10,652$ were placed in the bark's right depository on that date, but do not appear on the July 31 bark statement. What is the adjusted book balance?

Two limitations of internal control systems are ____________________ and ________________.

A voucher system's control over cash disbursements begins when a company incurs an obligation that will result in eventual payment of cash.

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.

____________ are short-term,highly liquid investment assets that are readily convertible to a known amount of cash.

An NSF check for $17.50 would be recorded as a debit to Cash and a credit to Accounts Receivable.

The internal document prepared by a department manager that informs the purchasing department of its needs is the

The purposes and principles of internal control are fundamentally the same across the globe.However,cultural differences sometimes suggest different emphasis on the mix of control procedures.