Question 1

The bank statement included a check from a customer's payment of an account receivable that had been returned NSF in the amount of $1,228.
Prepare the necessary adjusting journal entries.

Accepted Answer

The answer of The bank statement included a check from...

Question 2

Brown Company's bank statement for September 30 showed a cash balance of $1,350. The company's Cash account in its general ledger showed a $995 debit balance. The following information was also available as of September 30.
a. A customer's check for $100 marked NSF was returned to Brown Company by the bank. In addition, the bank charged the company's account a $25 processing fee.
b. The September 30 cash receipts, $1,250, were placed in the bank's night depository after banking hours on that date and this amount did not appear on the September 30 bank statement.
c. A $15 debit memorandum for checks printed by the bank was included with the canceled checks.
d. Outstanding checks amounted to $1,145.
e. A customer's note for $900 was collected by the bank. A collection fee of $25 was deducted by the bank and the difference was deposited in the account.
f. Included with the canceled checks was a check for $275, drawn on another company, Browne Inc.
(a) Prepare a bank reconciliation as of September 30.
(b) Prepare any necessary adjusting journal entries necessary as a result of the bank reconciliation.

Accepted Answer

The answer of Brown Company's bank statement for September 30...

Question 3

An internal control system refers to the policies and procedures managers use to __________, ensure reliable accounting, promote efficient operations, and urge adherence to company policies.

Accepted Answer

The answer of An internal control system refers to the...

Question 4

Having external auditors test the company's financial records and evaluate the effectiveness of the internal control system is part of the internal control principle of ________________________.

Accepted Answer

The answer of Having external auditors test the company's financial...

Question 5

A company established a petty cash fund in May of the current year and experienced the following transactions affecting the fund during May:
May 1 Establish petty cash account in the amount of $300.
May 5 Paid for miscellaneous office supplies in the amount of $53.22.
May 9 Reimbursed Human Resource Manager for business lunch, $45.09.
May 15 Paid for minor landscaping services, $75.
May 22 Paid $65.00 for postage.
May 31 Counted remaining cash and discovered that $56.34 remained.
The company decided to increase the petty cash balance to $450. Prepare the journal entry to increase the fund on May 31.

Accepted Answer

The answer of A company established a petty cash fund...

Question 6

A sales system with prenumbered, controlled sales slips is an example of the internal control principle of _______________________.

Accepted Answer

The answer of A sales system with prenumbered, controlled sales...

Question 7

A company established a petty cash fund in May of the current year and experienced the following transactions affecting the fund during May:
May 1 Establish petty cash account in the amount of $300.
May 5 Paid for miscellaneous office supplies in the amount of $53.22.
May 9 Reimbursed human resource manager for business lunch, $45.09.
May 15 Paid for minor landscaping services, $75.
May 22 Paid $65.00 for postage.
May 31 Counted remaining cash and discovered that $56.34 remained.
Prepare the journal entry to reimburse the fund on May 31.

Accepted Answer

The answer of A company established a petty cash fund...

Question 8

Based on the following information, prepare the November bank reconciliation for the Avisa Company.
The following information is available for the Avisa Company for the month of November:
a. On November 30, after all transactions have been recorded, the balance in the company's Cash account has a balance of $27,202.
b. The company's bank statement shows a balance on November 30 of $29,279.
c. Outstanding checks at November 30 include check #3030 in the amount of $1,525 and check #3556 in the amount of $1,459.
d. A credit memo included with the bank statement indicates that the bank collected $780 on a noninterest-bearing note receivable for Avisa. The bank deducted a $10 collection fee and credited the remainder of $770 to Avisa's account.
e. A debit memo included with the bank statement shows a $67 NSF check from a customer, J. Brown.
f. A deposit placed in the bank's night depository on November 30 totaled $1,675 and did not appear on the bank statement.
g. Examination of the checks on the bank statement with the entries in the accounting records reveals that check #3445 for the payment of an account payable was correctly written for $2,450, but was recorded in the accounting records as $2,540.
h. Included with the bank statement was a debit memorandum in the amount of $25 for bank service charges. It has not been recorded on the company's books.

Accepted Answer

The answer of Based on the following information, prepare the...

Question 9

Two sales clerks should not share the same cash register. This refers to the internal control principle of _______________________.

Accepted Answer

The answer of Two sales clerks should not share the...

Question 10

____________ are short-term, highly liquid investment assets that are readily convertible to a known amount of cash.

Accepted Answer

The answer of ____________ are short-term, highly liquid investment assets...

Question 11

________________ includes currency, coins, and amounts on deposit in checking accounts and many savings accounts.

Accepted Answer

The answer of ________________ includes currency, coins, and amounts on...

Question 12

Highlight Hotel 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 December 31, its Cash account shows a $18,393, debit balance. Highlight Hotel's June 30 bank statement shows $15,921 on deposit in the bank. Prepare a bank reconciliation for Highlight Hotel using the following information:

Accepted Answer

The answer of Highlight Hotel deposits all cash receipts on...

Question 13

________________________ refers to a company's ability to pay for its short-term obligations.

Accepted Answer

The answer of ________________________ refers to a company's ability to...

Question 14

A company established a petty cash fund in May of the current year and experienced the following transactions affecting the fund during May:
May 1 Establish petty cash account in the amount of $300.
May 5 Paid for miscellaneous office supplies in the amount of $53.22.
May 9 Reimbursed human resource manager for business lunch, $45.09.
May 15 Paid for minor landscaping services, $75.00.
May 22 Paid $65.00 for postage.
May 31 Counted remaining cash and discovered that $56.34 remained.
Prepare the journal entry to establish the fund on May 1.

Accepted Answer

The answer of A company established a petty cash fund...

Question 15

A person who controls or has access to an asset must not keep that asset's accounting records. This refers to the internal control principle of ________________________.

Accepted Answer

The answer of A person who controls or has access...

Question 16

An employee is __________ when a company purchases an insurance policy against losses from theft by that employee.

Accepted Answer

The answer of An employee is __________ when a company...

Question 17

Two limitations of internal control systems are ____________________ and ________________.

Accepted Answer

The answer of Two limitations of internal control systems are...

Question 18

The document that is an itemized statement of goods prepared by the vendor listing the customer's name, items sold, sales prices, and terms of the sale is the __________________________.

Accepted Answer

The answer of The document that is an itemized statement...

Question 19

A customer's check is deposited by a company. The check is uncollectible because the balance in the customer's account is not large enough to cover the check. This check is referred to as a __________ check.

Accepted Answer

The answer of A customer's check is deposited by a...

Question 20

________________________ are checks written (or drawn) by the depositor, deducted on the depositor's records and sent to the payee, but not yet recorded by the bank for payment at the bank statement date.

Accepted Answer

The answer of ________________________ are checks written (or drawn) by...

Quiz 6: Accounting for Cash and Internal Controls

The bank statement included a check from a customer's payment of an account receivable that had been returned NSF in the amount of $1,228. Prepare the necessary adjusting journal entries.

An internal control system refers to the policies and procedures managers use to __________, ensure reliable accounting, promote efficient operations, and urge adherence to company policies.

Having external auditors test the company's financial records and evaluate the effectiveness of the internal control system is part of the internal control principle of ________________________.

A sales system with prenumbered, controlled sales slips is an example of the internal control principle of _______________________.

Two sales clerks should not share the same cash register. This refers to the internal control principle of _______________________.

____________ are short-term, highly liquid investment assets that are readily convertible to a known amount of cash.

________________ includes currency, coins, and amounts on deposit in checking accounts and many savings accounts.

________________________ refers to a company's ability to pay for its short-term obligations.

A person who controls or has access to an asset must not keep that asset's accounting records. This refers to the internal control principle of ________________________.

An employee is __________ when a company purchases an insurance policy against losses from theft by that employee.

Two limitations of internal control systems are ____ and .

The document that is an itemized statement of goods prepared by the vendor listing the customer's name, items sold, sales prices, and terms of the sale is the __________________________.

A customer's check is deposited by a company. The check is uncollectible because the balance in the customer's account is not large enough to cover the check. This check is referred to as a __________ check.

________________________ are checks written (or drawn) by the depositor, deducted on the depositor's records and sent to the payee, but not yet recorded by the bank for payment at the bank statement date.