Question 1

For which of the following adjustments would NO journal entry be required following completion of the bank reconciliation?

Accepted Answer

Errors by the bank are corrected by the bank itself and do not require a journal entry by the company to adjust its own records.

Question 2

In preparing the monthly bank reconciliation,Fur Ltd ascertains that there is a $750 cheque from Hunt Traders for merchandise that is marked NSF.The journal entry to record this in Fur Ltd's books is:

Accepted Answer

The cheque from Hunt Traders bounced, so it should be recorded as a return of funds from Accounts receivable to Cash. Therefore, the correct journal entry is to debit Accounts receivable for $750 and credit Cash for $750. Option A fits this description. Option B is incorrect as it records the return of funds to Inventory, which is not appropriate. Option C is incorrect because the return of funds is to Accounts receivable, not Accounts payable. Option D is also incorrect as it records the return of funds to Accounts receivable instead of reducing the amount owed by debiting it.

Question 3

In preparing a bank reconciliation statement for a business with a substantial bank balance,the appropriate treatment for monthly service charge appearing on the bank statement,$45,is to:

Accepted Answer

The monthly service charge appearing on the bank statement is a deduction from the balance per company records, as it is a charge by the bank for its services. Therefore, it should be deducted from the balance per company records to arrive at the adjusted cash balance.

Question 4

Simon Ltd's bank statement showed a credit balance of $14 000 at 31 October.It also showed bank service charges of $2200 and a direct credit received from a customer amounting to $600.Unpresented cheques were $1400 and there was an outstanding deposit for $4600.
- What was the bank balance in Simon Ltd's books at 31 October before the adjustments?

Accepted Answer

The answer of Simon Ltd's bank statement showed a credit...

Question 5

On 30 June,the petty cash fund of Charles Ltd was replenished when the count of petty cash on hand totalled $60.Vouchers revealed that postage expenses of $40 had been incurred.The journal entry to record replenishment was:

Accepted Answer

The replenishment of the petty cash fund involves recording the expenses incurred. The postage expense of $40 is debited, and cash is credited to reflect the outflow of cash used for these expenses.

Question 6

Alison Ltd's bank statement showed a debit balance of $7000 at 31 December.It also showed bank service charges of $1100 and a direct credit received from a customer for the company amounting to $300.Unpresented cheques were $700 and there was an outstanding deposit for $2300.
-What was the bank balance in Alison Ltd's books at 31 December before the adjustments?

Accepted Answer

The answer of Alison Ltd's bank statement showed a debit...

Question 7

In preparing a bank reconciliation statement for a business with a substantial bank balance,the appropriate treatment for a cheque for $952 in payment of a supplier's account that was erroneously entered as $592 in the company's books is to:

Accepted Answer

The cheque for $952 was erroneously entered as $592 in the company's books means that the company recorded $360 less than the actual amount that was paid to the supplier. Therefore, the appropriate treatment for this error is to deduct it from the balance per company records. This is because the company has recorded less than the actual amount, which means that the company's cash balance is overstated by $360. Deducting this amount from the company's records will give the correct cash balance.

Question 8

Tell Ltd's bank statement showed a credit balance of $7000 at 30 November.It also showed bank service charges of $1100 and the collection of a note for the company amounting to $300.Unpresented cheques were $700 and there was an outstanding deposit for $2300.
- What was the bank balance in Tell Ltd's books at 30 November before the adjustments?

Accepted Answer

The answer of Tell Ltd's bank statement showed a credit...

Question 9

Alison Ltd's bank statement showed a debit balance of $7000 at 31 December.It also showed bank service charges of $1100 and a direct credit received from a customer for the company amounting to $300.Unpresented cheques were $700 and there was an outstanding deposit for $2300
-What was the final bank balance in Alison Ltd's ledger at 31 December?

Accepted Answer

The answer of Alison Ltd's bank statement showed a debit...

Question 10

Which of the following is NOT a common feature of a petty cash system?

Accepted Answer

When the petty cash fund is replenished, petty cash is debited (not credited). This is because the petty cash fund is an asset account, so when it is replenished, it is increasing in value. Therefore, the accounting entry should reflect a debit to the asset account, not a credit. A, B, and C are all common features of a petty cash system.

Question 11

In preparing a bank reconciliation statement for a business with a substantial bank balance,the appropriate treatment for interest earned on account,$240,is to:

Accepted Answer

Interest earned on a bank account is recorded in the company's books but not reflected in the bank statement until the end of the statement period. Therefore, it needs to be added to the balance per company records to match it with the balance as per bank statement during reconciliation.

Question 12

In preparing a bank reconciliation statement for a business with a substantial bank balance,the appropriate treatment for dividend on shares,$1200,deposited directly into the bank account,appearing on the bank statement is to:

Accepted Answer

Dividend on shares is a receipt of income for the business and should be recorded in the books of accounts. Since it was deposited directly into the bank account, it should be added to the balance per company records.

Question 13

The debit recorded in the journal to reimburse the petty cash fund is to:

Accepted Answer

When reimbursing the petty cash fund, the debit is made to various accounts for which the petty cash was disbursed to reflect the expenses or purchases made with the petty cash. This ensures that the company's financial records accurately represent how the petty cash was used.

Question 14

In preparing a bank reconciliation statement for a business with a substantial bank balance,the appropriate treatment for $650 that a customer paid directly into the company's bank account is to:

Accepted Answer

Since the customer paid directly into the company's bank account, it will be recorded in the company's bank records but may not be included in the bank statement. Therefore, it needs to be added to the balance per company records.

Question 15

Which of the following items would require a journal entry following preparation of the bank reconciliation statement?

Accepted Answer

Errors by the company require a journal entry to correct the company's cash account, aligning it with the corrected bank statement balance after reconciliation. Errors by the bank are typically resolved by the bank itself and do not require a journal entry by the company. Unpresented cheques and receipts not yet banked are adjustments in the bank reconciliation process but do not require a journal entry as they are timing differences that resolve themselves when the cheques are presented or the receipts are banked.

Question 16

In preparing the monthly bank reconciliation,Jon Ltd ascertains that there is a direct credit from a customer for $500 and an interest on overdraft charge of $760.Outstanding cheques total $9400 and there is a deposit in transit for $2900.It will be necessary to make journal entries for:

Accepted Answer

B) The direct credit for $500 and the interest charge of $760 need journal entries because they affect the company's cash balance and have not been recorded in the company's books yet. Outstanding cheques and deposits in transit are timing differences that do not require journal entries, as they are adjustments made in the bank reconciliation process to reconcile the book balance of cash with the bank statement balance.

Question 17

Simon Ltd's bank statement showed a credit balance of $14 000 at 31 October.It also showed bank service charges of $2200 and a direct credit received from a customer amounting to $600.Unpresented cheques were $1400 and there was an outstanding deposit for $4600.
-What was the final bank balance in Simon Ltd's ledger at 31 October?

Accepted Answer

The answer of Simon Ltd's bank statement showed a credit...

Question 18

In preparing a bank reconciliation statement for a business with a substantial bank balance,the appropriate treatment for cheques unpresented at end of month,$4900,is to:

Accepted Answer

Unpresented cheques are cheques that have been issued by the company but have not yet been cleared by the bank. Therefore, they should be deducted from the balance as per the bank statement to reconcile it with the company's records.

Question 19

Tell Ltd's bank statement showed a credit balance of $7000 at 30 November.It also showed bank service charges of $1100 and the collection of a note for the company amounting to $300.Unpresented cheques were $700 and there was an outstanding deposit for $2300.
-What was the final bank balance in Tell Ltd's ledger at 30 November?

Accepted Answer

The answer of Tell Ltd's bank statement showed a credit...

Quiz 7: Internal Control and Cash

For which of the following adjustments would NO journal entry be required following completion of the bank reconciliation?

In preparing the monthly bank reconciliation,Fur Ltd ascertains that there is a $750 cheque from Hunt Traders for merchandise that is marked NSF.The journal entry to record this in Fur Ltd's books is:

In preparing a bank reconciliation statement for a business with a substantial bank balance,the appropriate treatment for monthly service charge appearing on the bank statement,$45,is to:

On 30 June,the petty cash fund of Charles Ltd was replenished when the count of petty cash on hand totalled $60.Vouchers revealed that postage expenses of $40 had been incurred.The journal entry to record replenishment was:

In preparing a bank reconciliation statement for a business with a substantial bank balance,the appropriate treatment for a cheque for $952 in payment of a supplier's account that was erroneously entered as $592 in the company's books is to:

Which of the following is NOT a common feature of a petty cash system?

In preparing a bank reconciliation statement for a business with a substantial bank balance,the appropriate treatment for interest earned on account,$240,is to:

In preparing a bank reconciliation statement for a business with a substantial bank balance,the appropriate treatment for dividend on shares,$1200,deposited directly into the bank account,appearing on the bank statement is to:

The debit recorded in the journal to reimburse the petty cash fund is to:

In preparing a bank reconciliation statement for a business with a substantial bank balance,the appropriate treatment for $650 that a customer paid directly into the company's bank account is to:

Which of the following items would require a journal entry following preparation of the bank reconciliation statement?

In preparing the monthly bank reconciliation,Jon Ltd ascertains that there is a direct credit from a customer for $500 and an interest on overdraft charge of $760.Outstanding cheques total $9400 and there is a deposit in transit for $2900.It will be necessary to make journal entries for:

In preparing a bank reconciliation statement for a business with a substantial bank balance,the appropriate treatment for cheques unpresented at end of month,$4900,is to: