Exam 8: Internal Control and Cash

The Sarbanes-Oxley Act applies only to companies whose stock is traded on public exchanges.

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.

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

On April 2,Granger Sales decides to establish a $125 petty cash fund to relieve the burden on Accounting.​ (a)Journalize the establishment of the fund. (b)On April 10,the petty cash fund has receipts for mail and postage of $43.50,contributions and donations of$29.50,meals and entertainment of $38.25,and $13.55 in cash.Journalize the replenishment of the fund. (c)On April 11,Granger Sales decides to increase petty cash to $200.Journalize this event.

The bank statement for Gatlin Co.indicates a balance of $7,735 on June 30.After the journals for June had been posted,the cash account had a balance of $4,098.​​ Record the appropriate journal entries that would be necessary for Gatlin Co.

Pilger Corporation has cash on hand at year-end of $201,000 and a negative cash flow from operations of $144,000.What is the ratio of cash to monthly cash expenses?

On August 3,Sonar Sales decides to establish a $275 petty cash fund 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 donationsof $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.Journalize this transaction.

The following data are from the Muffin Shoppe for the past four years.​​ Calculate the following:

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

The main reason that the bank statement cash balance and the company's cash balance do not initially balance is due to timing differences.

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

Money market accounts,commercial paper,and U.S.Treasury bills are examples of cash equivalents.

An element of internal control is

Match the following elements of internal control: -Control environment

Thompson Company 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 Company.

Journal entries based on the bank reconciliation are required in the company's accounts for

The following procedures were recently implemented at Pampered Pets,Inc.For each procedure,indicate whether the internal control over cash represents (1)a strength or (2)a weakness.If it is a weakness,explain why.​ (a)At the end of the day,cash register clerks are required to use their own funds to make up any cash shortagesin their registers.​ (b)At the end of the day,an accounting clerk compares the duplicate copy of the daily cash deposit slip with thedeposit receipt obtained from the bank.​ (c)After necessary approvals have been obtained for the payment of a voucher,the treasurer signs and mails thecheck.The treasurer then stamps the voucher and supporting documentation as paid and returns the voucherand supporting documentation to the accounts payable clerk for filing.​ (d)Along with the petty cash receipts for postage,office supplies,etc.,several postdated employeechecks are in the petty cash fund.

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.​Prepare a bank/account reconciliation and write any necessary journal entries for the reconciliation.

Which of the following items that appeared on the bank reconciliation did not require a journal entry?

The amount of cash to be reported on the balance sheet at June 30 is the