Homework Chapter 4 Flashcards
Garrison Corporation was closing its books on May 31. Garrison’s accountant prepared a bank reconciliation as of May 31 and has found the following possible reconciling items between its book balance and its cash balance per the bank:
Garrison’s book balance: $76,940
Outstanding checks: $550
Customer’s NSF check returned by the bank: $175
Interest earned on checking account: $55
In the search for reconciling items, the accountant also discovered that Garrison made an error in recording a customer’s check: the amount was recorded in cash receipts as $480; the bank recorded the amount correctly as $840.
What amount will Garrison report as its adjusted cash balance at May 31?
$77180
Add:
Interest earned: $55
Error in recording customer check: $360 Total Add: $415
Less: NSF check: $(175)
Adjusted cash balance May 31: $77,180
Koosh, a furniture company, made an error in recording a check received from a customer. Last month, Koosh’s customer bought a table for $959. Upon receiving the check from the customer, Koosh entered the check as an increase of cash of $995.
Record the appropriate journal entry to correct the error. If an amount box does not require an entry, leave it blank.
Accounts receivable Debit $36
Cash Credit $36
Which one of the following would not appear on a bank statement for a checking account?
a. Service charges
b. Outstanding checks
c. Deposits
d. Interest earned
B
Which of the following is not one of the five components of internal control?
a. Risk assessment
b. Analysis of control procedures
c. Control environment
d. Information and communication
B
Deposits made by a company but not yet reflected in a bank statement are called:
Deposits in transit
Cash management principles do not include
a. earning the greatest return possible on excess cash.
b. delaying payment of suppliers.
c. speeding up collection from customers.
d. paying suppliers promptly.
D
The focus on cash management is getting the most from the money available for use.
Conway Company reported the following information:
Cash balance on balance sheet: $22,066
Pre-reconciliation cash account balance: $23,916
Bank statement: $23,220
Bank service charges: $350
Bank debit memos (utility payments): $1,500
Deposits in transit: $9,160
Prepare the adjusting entries that Conway must make at December 31. If an amount box does not require an entry, leave it blank.
Bank service charge expenses Debit: $350
Cash Credit: $350
Utilities expense Debit: $1500
Cash Credit: $1500
Milner Department Store has one cash register on which it performs daily cash counts. Recently, the cash count indicated that there was $9,218.47 in the register after deducting and removing the opening change amount of $50. However, the cash register tape reported sales in the amount of $9,217.85. Milner deposited its cash collected in its bank account.
Prepare a journal entry to record these cash collections. If an amount box does not require an entry, leave it blank. Round your answers to two decimal places, if necessary.
Cash Debit: $9218.47
Cash Over and Short: Credit: $0.62
Sales Revenue: $9217.85
Blakely Industries has the following items:
Currency: $26,250
Customer checks that have not been deposited: $700
U.S. government bonds that originally maturing in 3 months: $13,000
U.S. government bonds that originally maturing in 12 months: $14,000
Cash in saving and checking accounts: $64,000
Certificates of deposits that originally maturing in 18 months: $47,000
How much should Blakely report as cash and equivalents on its balance sheet?
$103950
Eliminate those items that do not meet the definition of cash or cash equivalent.
What is the primary role of internal controls in managing a business?
To constrain subordinates’ activities in order to prevent employees from deviating from the scope of their responsibilities and encouraging them to act in the best interest of the business.
Conway Company reported the following information:
Cash balance on balance sheet: $22,066
Pre-reconciliation cash account balance: $23,916
Bank statement: $23,220
Bank service charges: $350
Bank debit memos (utility payments): $1,500
Deposits in transit: $9,160
Calculate the amount of outstanding checks as of December 31.
$10314
Cash balance from bank statement: $23,220
Add: Deposits in transit: $9,160
Less: Adjusted cash balance: $(22,066)
Outstanding checks: $10,314
