Chapter 7 Homework Answer

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Chapter 7 Homework

 

1.  Prepare journal entries for each of the following (refer to the Chart of Accounts for exact wording of account titles):

 

Instructions

A.

On July 1, issued a check to establish a petty cash fund of $750.

B.

The amount of cash in the petty cash fund is $102. Issued a check to replenish the fund, based on the following summary of petty cash receipts: store supplies, $507, and miscellaneous selling expense, $83. Record any missing funds in the cash short and over account.

 

2.   The actual cash received from cash sales was $39,114 and the amount indicated by the cash register total was $39,129.

Journalize the entry to record the cash receipts and cash sales. Refer to the Chart of Accounts for exact wording of account titles.

 

 

3 .  The actual cash received from cash sales was $55,081 and the amount indicated by the cash register total was $54,840.

Journalize the entry to record the cash receipts and cash sales. Refer to the Chart of Accounts for exact wording of account titles.

 

4.   Bank Reconciliation

Identify each of the following reconciling items as:

  1. an addition to the cashbalance according to the bank statement
  2. a deduction from the cash balance according to the bank statement
  3. an addition to the cash balance according to the company’s records
  4. a deduction from the cash balance according to the company’s records

(None of the transactions reported by bank debit and credit memos have been recorded by the company.)

Item
1. Bank service charges, $75  
2. Check of a customer returned by bank to company because of insufficient funds, $880.  
3. Check for $275 incorrectly recorded by the company as $725  
4. Check for $100 incorrectly charged by bank as $1,000.00  
5. Deposit in transit, $5,550  
6. Outstanding checks, $10,350.  
7. Note collected by bank, $12,720.  

 

 

 

5.

Entries Based on Bank Reconciliation

Which of the reconciling items listed below require an entry in the company’s accounts? (None of the transactions reported by bank debit and credit memos have been recorded by the company.)

 

Item
1. Bank service charges, $75  
2. Check of a customer returned by bank to company because of insufficient funds, $880.  
3. Check for $275 incorrectly recorded by the company as $725  
4. Check for $100 incorrectly charged by bank as $1,000.00  
5. Deposit in transit, $5,550  
6. Outstanding checks, $10,350.  
7. Note collected by bank, $12,720.  

 

6.

The following data were accumulated for use in reconciling the bank account of Creative Design Co. for August 20Y6:

1.

Cash balance according to the company’s records at August 31, $24,403.

2.

Cash balance according to the bank statement at August 31, $31,504.

3.

Checks outstanding, $13,345.

4.

Deposit in transit, not recorded by bank, $6,727.

5.

A check for $55 in payment of an account was erroneously recorded in the check register as $550.

6.

Bank debit memo for service charges, $12.

Journalize the entry or entries that should be made by the company. Refer to the Chart of Accounts for exact wording of account titles.

 

 

 

7.

An accounting clerk for Chesner Co. prepared the following bank reconciliation:

Chesner Co.

Bank Reconciliation

July 31, 20Y4

 

 

1

Cash balance according to company’s records

 

$11,214.00

2

Adjustments:

 

 

3

Outstanding checks

$3,305.00

 

4

Error by Chesner Co. in recording Check No. 1056 as $730 instead of $370

360.00

 

5

Note for $11,200 collected by bank, including interest

11,648.00

 

6

Deposit in transit on July 31

(8,491.00)

 

7

Bank service charges

(10.00)

 

8

Total adjustments

 

6,812.00

9

Cash balance according to bank statement

 

$18,026.00

A.

From the data in this bank reconciliation, prepare a new bank reconciliation for Chesner Co., using the format shown in the 

Let’s Review section

. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

B.

If a balance sheet were prepared for Chesner Co. on July 31, 20Y4, what amount should be reported for cash?

 

 

8.

 

Journalize the entries to record the following (refer to the Chart of Accounts for exact wording of account titles):

A.

On July 1, check No. 12-375 is issued to establish a petty cash fund of $1,050.

B.

The amount of cash in the petty cash fund is now $106. Check No. 12-476 is issued to replenish the fund, based on the following summary of petty cash receipts: office supplies, $603; miscellaneous selling expense, $183; miscellaneous administrative expense, $136. (Because the amount of the check to replenish the fund plus the balance in the fund do not equal $1,050, record the discrepancy in the cash short and over account.)

 

 

9.

Alaska Impressions Co. records all cash receipts on the basis of its cash register tapes. Alaska Impressions discovered during October 20Y3 that one of its sales clerks had stolen an undetermined amount of cash receipts by taking the daily deposits to the bank. The following data have been gathered for October:

Cash in bank according to the general ledger

$12,340

Cash according to the October 31, 20Y3, bank statement

12,410

Outstanding checks as of October 31, 20Y3

3,600

Bank service charge for October

30

Note receivable, including interest collected by bank in October

2,435

No deposits were in transit on October 31.

A.

Determine the amount of cash receipts stolen by the sales clerk.

B.

What accounting controls would have prevented or detected this theft?

 

 

 

10.  Wyoming Restoration Company completed the following selected transactions during July 20Y1:

July 1.

Established a petty cash fund of $1,100.

12.

The cash sales for the day, according to the cash register records, totaled $8,192. The actual cash received from cash sales was $8,220.

31.

Petty cash on hand was $47. Replenished the petty cash fund for the following disbursements, each evidenced by a petty cash receipt:

July 3.

Store supplies, $580.

7.

Express charges on merchandise sold, $90 (Delivery Expense).

9.

Office supplies, $30.

13.

Office supplies, $35.

19.

Postage stamps, $50 (Office Supplies).

21.

Repair to office file cabinet lock, $60 (Miscellaneous Administrative Expense).

22.

Postage due on special delivery letter, $28 (Miscellaneous Administrative Expense).

24.

Express charges on merchandise sold, $135 (Delivery Expense).

30.

Office supplies, $25.

 

July 31.

The cash sales for the day, according to the cash register records, totaled $10,241. The actual cash received from cash sales was $10,232.

31.

Decreased the petty cash fund by $150.

Journalize the transactions. Refer to the Chart of Accounts for exact wording of account titles.

 

11.

The cash account for Pala Medical Co. at June 30, 20Y1, indicated a balance of $82,726. The bank statement indicated a balance of $128,040 on June 30, 20Y1. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items:

A.

Checks outstanding totaled $34,090.

B.

A deposit of $18,430, representing receipts of June 30, had been made too late to appear on the bank statement.

C.

The bank collected $31,779 on a $29,700 note, including interest of $2,079.

D.

A check for $1,900 returned with the statement had been incorrectly recorded by Pala Medical Co. as $190. The check was for the payment of an obligation to Skyline Supply Co. for a purchase on account.

E.

A check drawn for $370 had been erroneously charged by the bank as $730.

F.

Bank service charges for June amounted to $55.

 

Instructions

1.

Prepare a bank reconciliation. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

2.

Journalize the necessary entries. Refer to the Chart of Accounts for exact wording of account titles.

3.

If a balance sheet were prepared for Pala Medical Co. on June 30, 20Y1, what amount should be reported as cash?

       

 

 

 
 
 
 
 

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Chapter 7 Homework Answer

This question is taken from Accounting 001 – Introduction ot Accounting 1 » Winter 2022 » Homeworks