CH.6 Graded Practice - Sample problems for exam PDF

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CH. 6 Graded Practice 1) Waupaca Company establishes a $470 petty cash fund on September 9. On September 30, the fund shows $221 in cash along with receipts for the following expenditures: transportation costs of merchandise purchased, $55; postage expenses, $61; and miscellaneous expenses, $120. The petty cashier could not account for a $13 shortage in the fund. The company uses the perpetual system in accounting for merchandise inventory. Prepare (1) the September 9 entry to establish the fund, (2) the September 30 entry to reimburse the fund, and (3) an October 1 entry to increase the fund to $525. (1) Prepare the journal entry to establish the Petty Cash fund. a. Petty Cash 470 Cash 470 (2) Record the reimbursement of the petty cash fund. a. Merchandise Inventory 55 Postage Expense 61 Miscellaneous Expense 120 Cash Short and over 13 Cash (470 – 221) 249 (3) Record the increase of the petty cash fund. a. Petty Cash (470 – 525) 55 Cash 55

2) Nolan Company 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 June 30, 2017, its Cash account shows a $28,500 debit balance. Nolan’s June 30 bank statement shows $28,323 on deposit in the bank.

a. Outstanding checks as of June 30 total $2,833. b. The June 30 bank statement included a $25 debit memorandum for bank services; the company has not yet recorded the cost of these services. c. In reviewing the bank statement, a $80 check written by the company was mistakenly recorded in the company’s books at $89. d. June 30 cash receipts of $3,026 were placed in the bank’s night depository after banking hours and were not recorded on the June 30 bank statement. e. The bank statement included a $32 credit for interest earned on the cash in the bank.

Prepare a bank reconciliation for Nolan Company using the above information. Bank Statement Balance: 28,323 Add: Deposit of June 30: 3,026

Book Balance: 28,500 Add: Recording error on check: 9 Interest Earned: 32

Deduct: Outstanding Checks: 2,833

Deduct: Bank Service Charge: 25

Adjusted Bank Balance: 28,516

Adjusted Book Balance: 28,516

3) Wright Company 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 May 31, 2017, its Cash account shows a $31,500 debit balance. The company’s May 31 bank statement shows $29,800 on deposit in the bank.

a. The May 31 bank statement lists $300 in bank service charges; the company has not yet recorded the cost of these services. b. Outstanding checks as of May 31 total $7,600. c. May 31 cash receipts of $8,200 were placed in the bank’s night depository after banking hours and were not recorded on the May 31 bank statement. d. In reviewing the bank statement, a $600 check written by Smith Company was mistakenly drawn against Wright’s account. e. The bank statement shows a $200 NSF check from a customer; the company has not yet recorded this NSF check.

Prepare a bank reconciliation for the company using the above information. Bank Statement Balance: 29,800

Book Balance: 31,500

Add:

Add: Deposits of May 31: 8,200 Bank Error: 600

Deduct: Outstanding Checks: 7,600

2

Deduct: Bank Service Charge: 300

NSF Check: 200 Adjusted Bank Balance: 31,000

3

Adjusted Book Balance: 31,000...