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Exam 6: Reporting and Analyzing Cash and Internal Controls

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Question 31

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The following information is available to reconcile Young Co.'s book balance of cash with its bank statement cash balance as of April 30. The April 30 cash balance according to the accounting records is $58,176, and the bank statement cash balance for that date is $64,005. a. On April 30, the bank issued a credit memorandum for $53 interest earned on Young's account. b. A credit memorandum indicates that the bank collected $9,970 cash on a note receivable for Young, and credited the balance to the company's Cash account. Young did not record this transaction before receiving the statement. c. A debit memorandum of $895 is enclosed with the bank statement for an NSF check for $870 received from a customer. The bank assessed a $25 fee for processing it. d. Young's April 30 daily cash receipts of $5,102 were placed in the bank's night depository on that date, but do not appear on the April 30 bank statement. e. Young's April 30 cash disbursements journal indicates that Check No. 1837 for $584 and Check No. 1840 for $1,219 were both written and entered in the accounting records, but are not among the canceled checks. Required: Prepare the bank reconciliation for this company as of April 30.

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Question 32

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Clayborn Company deposits all cash receipts on the day they are received and makes all cash payments by check. At the close of business on May 31, its Cash account shows a debit balance of $17,025. Clayborn's May bank statement shows $15,800 on deposit in the bank. Determine the adjusted cash balance using the following information: The adjusted cash balance should be:

A) $16,400
B) $11,200
C) $21,000
D) $16,425
E) $17,000

F) A) and E)
G) A) and B)

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Question 33

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Umber Company's bank reconciliation for September is presented below. Prepare the necessary adjusting journal entries based on the reconciliation report.

Two sales clerks not being permitted to share the same cash register is an example of the internal control principle of _______________________.

Electronic funds transfers (EFTs) are decreasingly used by companies due to the inconvenience and high cost.

Rosemond Company establishes a $300 petty cash fund on September 9. On September 30, the fund shows $54 in cash along with receipts for the following expenditures: office supplies, $40; postage expenses, $123; and miscellaneous expenses, $80. The petty cashier could not account for a $3 shortage in the fund. The September 9 journal entry to establish the fund is.

Two limitations of internal control systems are ______________ and ________________.

Ramirez Clinic deposits all cash receipts on the day when they are received and it makes all cash payments by check. At the close of business on June 30, 2016, its Cash account shows an $14,445 debit balance. Ramirez Clinic's June 30 bank statement shows $13,402 on deposit in the bank. The following information is also available: The adjusted cash balance per the books on June 30 is

Marshall Company's bank reconciliation as of August 31 is shown below. The adjusting journal entries that Marshall must record for the deposit in transit is:

Insuring assets and requiring all accounting personnel to have CPA licenses are two important principles of internal control.

The following information is available for Birch Company at December 31: Based on this information, Birch Company should report Cash and Cash Equivalents on December 31 of:

Deposits in transit are deposits made and recorded by the depositor but not yet recorded on the bank statement.

If a check correctly written and paid by the bank for $272 is incorrectly recorded in the company's books for $227, how should this error be treated on the bank reconciliation?

Signature cards, deposit tickets, checks, and bank statements are all examples of internal control devices for banking activities.

Cash equivalents:

All of the following are true of the number of days' sales uncollected ratio except:

At the end of the current period, a company reported $725,000 in net credit sales and $100,000 in ending accounts receivable. Calculate this company's days' sales uncollected at the end of the current period.

The following account balances are taken from Everest Events at December 31. Calculate the number of days' sales uncollected for both years. According to this analysis, is the company's collection of receivables improving? Explain.

In the process of reconciling its bank statement for April, Donahue Enterprises' accountant compiles the following information: The adjusted cash balance per the books on April 30 is:

At the end of the day on March 15, the cash register's record shows $1,957, but the count of cash in the register is $1,965. Prepare the general journal entry to record the day's cash sales.