Exam 6: Internal Control and Accounting for Cash

In establishing a strong internal control system at Hook Company, management is concerned with administrative controls. Administrative controls include:

Jarvis Lawn Care's bank statement at August 31, 2013 showed an ending balance of $47,433.74. The unadjusted cash account balance for Jarvis is $40,475.96. The following data were gathered by Jarvis's accountant: Check number 2143 was correctly written for $427. It was recorded in the company's books as $472 for utilities. Outstanding checks as of August 31: $14,257.41. NSF check from customer: $98.63 Debit memo for fee related to the NSF check returned by the bank: $16.00 Credit memo related to interest earned: $20.00 Deposits in transit: $7,250.00 Required: 1) Prepare a bank reconciliation for Jarvis Lawn Care at August 31, 2013 2) Prepare the required journal entries for Cash at August 31, 2013

Blackwell Company established a petty cash fund in the amount of $200. At the end of the accounting period, the petty cash box contained receipts for expenditures amounting to $180 and $15 in cash. What effect will the entries to replenish the fund have on assets and expenses?

Davis Company's unadjusted bank balance at March 31, 2013 is $3,300. The bank reconciliation revealed outstanding checks amounting to $500 and deposits in transit of $400. Based on this information, Davis's true cash balance is:

Harrison Corporation uses a petty cash system to pay for miscellaneous expenses. Harrison established the petty cash fund with $300 on March 1, 2013. On March 31, 2013, the petty cash fund contained $56.49. The custodian of the fund saved the following vouchers for cash payments during March 2013: The three events related to petty cash were the following: (1) establishment of the fund, (2) cash payments for petty cash expenses, and (3) recognition of expenses and replenishment of the fund. Required: Prepare the journal entries for above events.

Which document issued by a bank reflects a transaction that decreases a company's checking account balance?

All adjustments to the unadjusted cash balance on a bank reconciliation require journal entries, but no adjustments to the bank statement balance require them.

Radford Company established a $500 petty cash fund. The following expenditures were made from the fund: Account of the cash in the fund revealed a balance of $45. Required: a) Show the effect of establishing the fund on the accounting equation. b) What check amount must be written to replenish the fund? c) Prepare the journal entry to (1) record the recognition of expenses paid from the fund.

A customer paid $16.50 for merchandise with a twenty dollar bill. The sales person gave incorrect change of $4.50 to the customer. At the end of the day the cash register showed total sales receipts of $285. Based on this information, the journal entry to record sales and correct the error would be:

Koger Company's bank statement included an NSF check written by one of its customers. What effect will the entry to recognize the NSF check have on the company's financial statements?

What documentation issued by a bank increases a company's checking account balance at the bank?

The true cash balance can only be determined if both the unadjusted bank balance and the unadjusted cash balance are known.

Wolfe Company made the following journal entries related to its bank reconciliation for October 31, 2013: Required: a) Assuming that the unadjusted cash balance on Wolfe's books was $7,354.28, what was the true cash balance at the end of the month? b) Prepare the portion of the bank reconciliation that begins with the unadjusted book balance and ends with the true cash balance.

Chavez Company replenished its petty cash fund. The expenditures of the fund included postage, office supplies and other miscellaneous items. Indicate the effects of recognizing the expenditures on financial statements and the replenishment of the petty cash fund.

Which of the following is an internal control procedure used to safeguard a company's assets?

While preparing its bank reconciliation, Mayhew Company determined that its bank had collected a $950 account receivable for the company and deducted a $35 collection fee. Which of the following shows the effect of this transaction on the financial statements?

At March 31, Casey Co. had a balance in its cash account of $9,500. At the end of March the company determined that it had outstanding checks of $900, deposits in transit of $600, a bank service charge of $20, and an NSF check from a customer for $200. The true cash balance at March 31 is:

What is the purpose of establishing a petty cash fund?

The April 30, 2013 bank statement for Turner Corporation shows an ending balance of $34,351. The unadjusted cash account balance was $28,350. The accountant for Turner gathered the following information: 1. There was a deposit in transit for $4,240 2) The bank statement reports a service charge of $39 3) A credit memo included in the bank statement shows interest earned of $95 4) Outstanding checks totaled $10,935 5) The bank statement included a $750 NSF check deposited in April What is the true cash balance as of April 30, 2013?

Requiring separation of duties in a business allows the work of one employee to serve as a check on the work of other employees.