Nakashima Gallery had the following petty cash transactions in February of the current year.
Feb. 2 Wrote a $400 check, cashed it, and gave the proceeds and the petty cashbox to Chloe Addison, the petty cashier.
5 Purchased paper for the copier for $14.15 that is immediately used.
9 Paid $32.50 COD shipping charges on merchandise purchased for resale, terms FOB shipping point. Nakashima uses the perpetual system to account for merchandise inventory.
12 Paid $7.95 postage to deliver a contract to a client.
14 Reimbursed Adina Sharon, the manager, $68 for mileage on her car.
20 Purchased stationery for $67.77 that is immediately used.
23 Paid a courier $20 to deliver merchandise sold to a customer, terms FOB destination.
25 Paid $13.10 COD shipping charges on merchandise purchased for resale, terms FOB shipping point.
27 Paid $54 for postage expenses.
28 The fund had $120.42 remaining in the petty cashbox. Sorted the petty cash receipts by accounts affected and exchanged them for a check to reimburse the fund for expenditures.
28 The petty cash fund amount is increased by $100 to a total of $500.
2. Prepare a petty cash payment report for February with these categories: delivery expense, mileage expense, postage expense, merchandise inventory (for transportation-in), and office supplies expense. Sort the payments into the appropriate categories and total the expenditures in each category.
The Petty cash payment reports show the total expenditure as $277.47.
Petty Cash Payments Report: The petty cash report should incorporate the date, the cash transfers into petty cash, details regarding the exchange, the sum circulated, and a running balance. When your balance reaches a point where you need a renewal sum, then you need to prepare a check to take petty cash to get back to the original funded amount.
Petty Cash Payments Report
Delivery of customer's merchandise
Reimbursement for mileage
Express delivery of contract
Purchased postage stamps
Merchandise inventory (transportation-in)*
COD charges on purchases
COD charges on purchases
Office supplies expense
Purchased paper for copier
A good system of internal control for cash provides adequate procedures for protecting both cash receipts and cash disbursements. Identify each of the following statements as either true or false regarding this protection.
a. A basic guideline for safeguarding cash is that all cash receipts be deposited weekly or monthly.
Blues Music Center had the following petty cash transactions in March of the current year. March 5 Wrote a $250 check, cashed it, and gave the proceeds and the petty cashbox to Jen Rouse, the petty cashier.
6 Paid $12.50 COD shipping charges on merchandise purchased for resale, terms FOB shipping point. Blues uses the perpetual system to account for merchandise inventory.
11 Paid $10.75 in delivery expense on merchandise sold to a customer, terms FOB destination.
12 Purchased office file folders for $14.13 that are immediately used.
14 Reimbursed Bob Geldof, the manager, $11.65 for office supplies purchased and used.
18 Purchased office printer paper for $20.54 that is immediately used.
27 Paid $45.10 COD shipping charges on merchandise purchased for resale, terms FOB shipping point.
28 Paid postage expense of $18.
30 Reimbursed Geldof $56.80 for mileage expense.
31 Cash of $61.53 remained in the fund. Sorted the petty cash receipts by accounts affected and
exchanged them for a check to reimburse the fund for expenditures.
31 The petty cash fund amount is increased by $50 to a total of $300.
2. Prepare a petty cash payment report for March with these categories: delivery expense, mileage expense, postage expense, merchandise inventory (for transportation-in), and office supplies expense. Sort the payments into the appropriate categories and total the expenses in each category.
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 $27,500 debit balance. The company’s May 31 bank statement shows $25,800 on deposit in the bank. Prepare a bank reconciliation for the company using the following information.
a. The May 31 bank statement lists $100 in bank service charges; the company has not yet recorded the cost of these services.
b. Outstanding checks as of May 31 total $5,600.
c. May 31 cash receipts of $6,200 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 $400 check written by Smith Company was mistakenly drawn against Wright’s account.
e. The bank statement shows a $600 NSF check from a customer; the company has not yet recorded this NSF check
Chavez Company most recently reconciled its bank statement and book balances of cash on August 31 and it reported two checks outstanding, No. 5888 for $1,028.05 and No. 5893 for $494.25. The following information is available for its September 30, 2017, reconciliation.
From the September 30 Bank Statement 16,800.45 9,620.05 11,272.85 18,453.25 PREVIOUS BALANCE TOTAL CHECKS AND DEBITS TOTAL DEPOSITS AND CREDITS CURRENT BALANCE Date 09/03 09/04 09/07 09/20 09/17 09/22 09/22 09/28 09/29 CHECKS AND DEBITS DEPOSITS AND CREDITS 5888 1,028.05 09/05 1,103.75 No. Amount Date Amount 5902 719.90 09/12 2,226.90 5901 1,824.25 09/21 4,093.00 5905 937.00 09/30 12.50 IN 09/25 2,351.70 5903 399.10 09/30 1,485.00 CM 5904 5907 5909 2,090.00 213.85 1,807.65
From Chavez Company’s Accounting Records Cash Acct. No. 101 Date Explanation PR Debit Credit Balance Aug. 31 Balance 15,278.15 Sep. 30 Total receipts R12 11,458.10 26,736.25 30 Total disbursements D23 9,332.05 17,404.20 Cash Receipts Deposited Cash Date Debit Sep. 5 1,103.75 12 2,226.90 21 4,093.00 25 2,351.70 30 1,682.75 11,458.10 Cash Disbursements Check Cash No. Credit 5901 1,824.25 5902 719.90 5903 399.10 5904 2,060.00 5905 937.00 5906 982.30 5907 213.85 5908 388.00 5909 1,807.65 9,332.05
Check No. 5904 is correctly drawn for $2,090 to pay for computer equipment; however, the recordkeeper misread the amount and entered it in the accounting records with a debit to Computer Equipment and a credit to Cash of $2,060. The NSF check shown in the statement was originally received from a customer, S. Nilson, in payment of her account. Its return has not yet been recorded by the company. The credit memorandum (CM) is from the collection of a $1,500 note for Chavez Company by the bank. The bank deducted a $15 collection expense. The collection and fee are not yet recorded.
3. The bank statement reveals that some of the prenumbered checks in the sequence are missing. Describe three situations that could explain this.
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