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Exam 7: Internal Control and Cash

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Question 81

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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.

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Question 82

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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.

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Question 83

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

Consider the following information taken from the cash account. Assume cash payments were 80% of collections. $\begin{array} { | c | l | } \hline \text { Cash } & \\\hline ? ? & \text { Beginning balance } \\\hline \$ 115,375 & \text { Collections } \\\hline ? ? & \text { Disbursements } \\\hline \$ 80,275 & \text { Ending balance } \\\hline\end{array}$ How much was the beginning balance of the cash account?

Entries are made to the petty cash account when

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.

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

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

Match the following elements of internal control: -risk assessment

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 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?

Assign the letter to indicate whether the following items would be added to or subtracted from the company’s books or the bank statement during the construction of a bank reconciliation.

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

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

Match the following elements of internal control: -control environment

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)

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

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

Journalize the entries to record the following: ​ ​ Journal

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