Question 1

Atlas Service Company decides to increase the amount of the petty cash fund from $350 to $800.A journal entry must be made to debit the Cash account and credit the Petty Cash account for $450.

Accepted Answer

The correct journal entry to increase the petty cash fund involves debiting the Petty Cash account and crediting the Cash account for $450, not the other way around.

Question 2

A petty cash fund was established with a $250 balance.It currently has cash of $38 and petty cash tickets totaling $212 for travel expense.Prepare the journal entry to record the replenishment of the fund.Omit explanation.

Accepted Answer

The answer of A petty cash fund was established with...

Question 3

A petty cash fund was established with a $300 balance.It currently has cash of $73 and petty cash tickets totaling $222 for travel expense.Prepare the journal entry to record the replenishment of the fund.Omit explanation.

Accepted Answer

The answer of A petty cash fund was established with...

Question 4

Prepare the journal entries for the following petty cash transactions of Williamson Dental Supplies.Omit explanations.
 $$\begin{array} { | r | r | } 
\hline \text { Aug. 1 } & \text { Established a petty cash fund with a } \$ 200 \text { balance } \
\hline & \text { The petty cash fund has } \$ 43 \text { in cash and } \$ 154 \text { in } \
& \text { petty cash tickets there were issued to pay for Office } \
&\text { Expense } ( \$ 75 ) \text { and Repair Expense } ( \$ 79 ) \
\text { Aug. 31 } & \text { Replenished the fund and recorded the expenditures } \
\hline \text { Oct. 15 } & \text { Increased the balance of the petty cash fund to } \$ 250 \
\hline
\end{array}$$

Accepted Answer

The answer of Prepare the journal entries for the following...

Question 5

Proceeds from credit and debit card transactions are deposited on the day of the actual sale.

Accepted Answer

Proceeds from credit and debit card transactions are deposited within a few days of the actual sale.

Question 6

Companies obtain cash from credit and debit card transactions by using third-party processors.

Accepted Answer

Companies hire a third-party processor to process credit and debit card transactions.

Question 7

The only time the Petty Cash account is used in a journal entry is when the account is established,increased,or decreased.

Accepted Answer

The Petty Cash account is used in journal entries primarily when it is established, increased, or decreased. These transactions involve moving funds to or from Petty Cash, which is a specific type of asset account used for minor business expenses.

Question 8

The two common methods of processing credit and debit card transactions are gross and net.

Accepted Answer

This statement is true. Gross processing involves the merchant paying a set fee for each transaction, while net processing subtracts the interchange fees from the total amount of the transaction before the merchant receives payment.

Question 9

Regarding the gross method of handling credit and debit card transactions,which of the following statements is correct?

Accepted Answer

The gross method of handling credit and debit card transactions involves depositing the total sale amount on the date of the actual sale, and then deducting the processing fees for all transactions processed for the month from the company's bank account, often on the last day of the month. On the date of sale, the Sales Revenue account is credited for the full amount of the sale, and a separate account is created to track the processing fees. The journal entry for a sale on account would be different from the journal entry for a credit or debit card sale under the gross method.

Question 10

A petty cash fund was established with a $200 balance.It currently has cash of $35 and petty cash tickets as follows: Office expense $130 and Entertainment Expense $45.Which of the following would be included in the journal entry to replenish the Petty Cash fund?

Accepted Answer

B) Cash Short & Over = $200 - $130 - $45 - $35 = $10 over

Question 11

Sales through credit cards and debit cards are journalized in the same way as sales on account.

Accepted Answer

Sales through credit cards and debit cards are typically recorded immediately as cash sales because the funds are guaranteed by the card issuer, unlike sales on account which are recorded as accounts receivable since payment is received at a later date.

Question 12

Prepare the journal entries for the following petty cash transactions of City Coffee Shop.Omit explanation.
 $$\begin{array} { | l | l | } 
\hline \text { Sept. 10 } & \text { Established a petty cash fund with a } \$ 300 \text { balance. } \
\hline & \begin{array} { l }  
\text { The petty cash fund has } \$ 105 \text { in cash and } \$ 200 \text { in petty cash } \
\text { tickets there were issued to pay for Delivery Expense } ( \$ 115 ) \
\text { and Postage Expense } ( \$ 85 ) \text {. Replenished the fund and }
\end{array} \
\text { Sept. 30 } & \text { recorded the expenditures. } \
\hline \text { Oct. 15 } & \text { Decreased the balance of the petty cash fund to } \$ 250 . \
\hline
\end{array}$$

Accepted Answer

The answer of Prepare the journal entries for the following...

Question 13

Under the gross method,when the credit card processor deposits the cash proceeds from credit and debit card sales ________.

Accepted Answer

Under the gross method, the credit card processor deposits the full amount of the sales into the company's bank account and later deducts the processing fees separately. This means the initial deposit reflects the gross amount of the sales, and the fees are handled in a subsequent transaction.

Question 14

The petty cash fund has a current balance of $250,which is the established fund balance.Based on activity in the fund,it is determined that the balance needs to be changed to $600.Which journal entry is needed to make this change?

Accepted Answer

The journal entry needed to change the petty cash fund balance from $250 to $600 is to debit the Petty Cash account for the increase of $350 and credit the Cash account for the same amount. Option A is incorrect because it would increase the cash balance by $600, whereas the actual increase needed is only $350. Option B is incorrect because a journal entry is needed to record the change in balance. Option D is incorrect because it would decrease the cash balance, whereas the intention is to increase it.

Question 15

Debit cards reduce the customer's bank account immediately but allow the customer to pay electronically instead of with currency or writing a check.

Accepted Answer

Debit cards use funds directly from the customer's bank account and do not require physical currency or a paper check to complete the transaction, making it an electronic payment method.

Question 16

The petty cash fund at Brookshire Company has a designated balance of $250.The fund currently holds $125 in cash and $127 in petty cash tickets.Based on this information,which of the following statements is correct?

Accepted Answer

The answer of The petty cash fund at Brookshire Company...

Question 17

Under the net method of handling credit and debit card payments,the ________.

Accepted Answer

The answer of Under the net method of handling credit...

Question 18

Debit cards offer the customer the convenience of buying something without having to pay cash immediately.

Accepted Answer

Debit cards reduce the customer's bank account immediately but allow the customer to pay electronically instead of with currency or writing a check.

Question 19

By accepting credit and debit cards,companies are able to attract more customers.

Accepted Answer

Accepting credit and debit cards provides more payment options for customers, which can increase sales and attract more customers who prefer this payment method.

Question 20

If the amount of the petty cash fund is decreased,the Petty Cash Fund account should be credited.

Accepted Answer

When the amount of petty cash fund is decreased, it means that money is being taken out of the fund. To record this transaction, we need to credit the Petty Cash Fund account as it represents a decrease in the assets of the business.

Quiz 8: Internal Control and Cash

Atlas Service Company decides to increase the amount of the petty cash fund from $350 to $800.A journal entry must be made to debit the Cash account and credit the Petty Cash account for $450.

A petty cash fund was established with a $250 balance.It currently has cash of $38 and petty cash tickets totaling $212 for travel expense.Prepare the journal entry to record the replenishment of the fund.Omit explanation.

A petty cash fund was established with a $300 balance.It currently has cash of $73 and petty cash tickets totaling $222 for travel expense.Prepare the journal entry to record the replenishment of the fund.Omit explanation.

Proceeds from credit and debit card transactions are deposited on the day of the actual sale.

Companies obtain cash from credit and debit card transactions by using third-party processors.

The only time the Petty Cash account is used in a journal entry is when the account is established,increased,or decreased.

The two common methods of processing credit and debit card transactions are gross and net.

Regarding the gross method of handling credit and debit card transactions,which of the following statements is correct?

A petty cash fund was established with a $200 balance.It currently has cash of $35 and petty cash tickets as follows: Office expense $130 and Entertainment Expense $45.Which of the following would be included in the journal entry to replenish the Petty Cash fund?

Sales through credit cards and debit cards are journalized in the same way as sales on account.

Under the gross method,when the credit card processor deposits the cash proceeds from credit and debit card sales ________.

The petty cash fund has a current balance of $250,which is the established fund balance.Based on activity in the fund,it is determined that the balance needs to be changed to $600.Which journal entry is needed to make this change?

Debit cards reduce the customer's bank account immediately but allow the customer to pay electronically instead of with currency or writing a check.

The petty cash fund at Brookshire Company has a designated balance of $250.The fund currently holds $125 in cash and $127 in petty cash tickets.Based on this information,which of the following statements is correct?

Under the net method of handling credit and debit card payments,the ________.

Debit cards offer the customer the convenience of buying something without having to pay cash immediately.

By accepting credit and debit cards,companies are able to attract more customers.

If the amount of the petty cash fund is decreased,the Petty Cash Fund account should be credited.