8 18 chapter 08 cash and internal controls part 3 feb

Info icon This preview shows pages 18–24. Sign up to view the full content.

View Full Document Right Arrow Icon
8-18
Image of page 18

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Chapter 08 - Cash and Internal Controls Part 3 Feb. 28 Delivery Expense ........................................... 18.00 Mileage Expense ............................................ 58.00 Postage Expense ........................................... 73.95 Merchandise Inventory .................................. 37.60 Office Supplies Expense ............................... 87.89 Cash Over and Short ..................................... 3.33 Cash .......................................................... 278.77 To reimburse the petty cash fund. 28 Petty Cash ...................................................... 100.00 Cash .......................................................... 100.00 To increase the petty cash fund. Instructor note : The two entries on Feb. 28 can be combined into one. 8-19
Image of page 19
Chapter 08 - Cash and Internal Controls Problem 8-4A (30 minutes) Part 1 CLARK COMPANY Bank Reconciliation July 31, 2011 Bank statement balance ........ $28,020 Book balance ...................... .......................................... $26,193 Add: Add: Deposit of July 31 ............... 10,152 38,172 Proceeds of note less collection charge ............ 8,955 35,148 Deduct: Deduct: Checks No. 3031 .... $1,380 NSF check ................ $ 805 3065 .... 336 Service charge ........... 15 3069 .... 2,148 3,864 Error (Check 3056) ...... 20 840 Adjusted bank balance .......... $34,308 Adjusted book balance ........ $34,308 Part 2 July 31 Cash ..................................................................... 8,955 Collection Expense .............................................. 45 Note Receivable ............................................. 9,000 To record note collection less fees. July 31 Accounts Receivable—J. Shaw .......................... 805 Cash ................................................................ 805 To charge account for NSF check plus fees. July 31 Miscellaneous Expenses ..................................... 15 Cash ................................................................ 15 To record bank service fee. July 31 Rent Expense ....................................................... 20 Cash ................................................................ 20 To correct an entry error. 8-20
Image of page 20

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Chapter 08 - Cash and Internal Controls Problem 8-4A (Concluded) Part 3 a. If the company's Cash account balance of $26,193 is listed on the bank reconciliation as $26,139 then: (i) The final balance that results from adjusting the bank statement balance will not be affected by the error; and (ii) The final balance that results from adjusting the book balance of cash will be understated by $54 ($26,193 - $26,139), and the bank reconciliation will not balance. b. The bank's collection of the $9,000 note less the $45 collection fee should have been added to the book balance of cash. Instead, it was added to the bank statement balance. As a result: (i) The final balance that results from adjusting the bank statement balance will be overstated by $8,955; and (ii) The final balance that results from adjusting the book balance will be understated by $8,955. 8-21
Image of page 21
Chapter 08 - Cash and Internal Controls Problem 8-5A (50 minutes) Part 1 ELS COMPANY Bank Reconciliation September 30, 2011 Bank statement balance .......... $18,363.25 Book balance ................... ....................................... $17,537.20 Add: Add: Interest earned .... $ 22.50 Deposit of Sept. 30 ................ 1,582.75 19,946.00 Proceeds of note less $15 fee ...... 1,385.00 1,407.50 18,944.70 Deduct: Deduct: Checks No. 5893 ..... $484.25 NSF check ........... 588.25 5906 ...... 859.30 Error (Check 5904) 30.00 5908 ..... 276.00 1,619.55 618.25 Adjusted bank balance ............ $18,326.45 Adjusted book balance ...... $18,326.45 Part 2 Sept. 30 Cash ............................................................. 22.50 Interest Earned ...................................... 22.50 To record interest earned. 30 Cash ............................................................. 1,385.00 Collection Expense ..................................... 15.00 Note Receivable ..................................... 1,400.00 To record note collection less fee. 30 Accounts Receivable— S.Nilson ................ 588.25 Cash ....................................................... 588.25 To charge account for NSF check plus fee. 30 Computer Equipment .................................. 30.00 Cash ....................................................... 30.00 To correct an entry error. 8-22
Image of page 22

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Chapter 08 - Cash and Internal Controls Problem 8-5A (Continued) Part 3 There are several possible reasons why some prenumbered checks are missing from the sequence of canceled checks returned with a bank statement. Reasons include: (1) Some of the checks in the numbered sequence may have cleared the bank in a previous period and were returned with the bank statement in that previous period.
Image of page 23
Image of page 24
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern