Choose from the following list of terms/phrases to best complete the following statements.
a. Cash c. Outstanding check e. Bank reconciliation
b. Cash equivalents d. Liquidity f. Current assets
1. The _______ category includes currency and coins along with amounts on deposit in bank accounts, checking accounts, and savings accounts.
The correct option for this statement is Cash.
Cash is a legal tender, currency, or coin that can use for trade merchandise, obligation, or services. It includes acceptable items for the deposit, including customer checks, cashier checks, certified checks, and money orders.
The cash category includes currency and coins along with the amounts on deposit in bank accounts, checking accounts, and savings accounts.
An internal control system consists of all policies and procedures used to protect assets, ensure reliable accounting, promote efficient operations, and urge adherence to company policies. Evaluate each of the following statements and indicate which are true and which are false regarding the objectives of an internal control system.
2. The primary objective of internal control procedures is to safeguard the business against theft from government agencies.
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 $22,352 debit balance. Nolan’s June 30 bank statement shows $21,332 on deposit in the bank. Prepare a bank reconciliation for the company using the following information.
a. Outstanding checks as of June 30 total $3,713.
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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