For each of the following items a through g, indicate whether its amount (1) affects the bank or book side of a bank reconciliation, (2) represents an addition or a subtraction in a bank reconciliation, and (3) requires an adjusting journal entry.
Bank or Book Side Add or Subtract Adj. Entry or Not
f. NSF checks. . . . . . . . . . . . . . .
Book side will be affected
Represents subtraction is a bank reconciliation statement
Adjustment is required in journal entry
NSF refers to when the account holder does not have enough money in their bank account to pay the check written against it.
Bank or Book
Add or subtract
Adj. Entry or Not
Waupaca Company establishes a $350 petty cash fund on September 9. On September 30, the fund shows $104 in cash along with receipts for the following expenditures: transportation-in, $40; postage expenses, $123; and miscellaneous expenses, $80. The petty cashier could not account for a $3 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.(3) an October 1 entry to increase the fund to $400.
BTN 6-2 Key comparative figures for Apple and Google follow.
$ millions Current Year Prior Year Current Year Prior Year
Accounts receivable . . . . . . . . . . . . $ 16,849 $ 17,460 $11,556 $ 9,383
Net sales . . . . . . . . . . . . . . . . . . . . . 233,715 182,795 74,989 66,00
Compute days’ sales uncollected (rounded to two decimals) for these companies for each of the two years shown. Comment on any trends for the companies. Which company has the largest percent change (rounded to two decimals) in days’ sales uncollected?
For each of these five separate cases, identify the principle(s) of internal control that is violated. Recommend what the business should do to ensure adherence to principles of internal control.
3. Nori Nozumi posts all patient charges and payments at the Hopeville Medical Clinic. Each night Nori backs up the computerized accounting system to a drive and stores it in a locked file at her desk.
The following information is available to reconcile Severino Co.’s book balance of cash with its bank statement cash balance as of December 31, 2017.
a. The December 31 cash balance according to the accounting records is $32,878.30, and the bank statement cash balance for that date is $46,822.40.
b. Check No. 1273 for $4,589.30 and Check No. 1282 for $400, both written and entered in the accounting records in December, are not among the canceled checks. Two checks, No. 1231 for $2,289 and
No. 1242 for $410.40, were outstanding on the most recent November 30 reconciliation. Check No. 1231 is listed with the December canceled checks, but Check No. 1242 is not.
c. When the December checks are compared with entries in the accounting records, it is found that Check No. 1267 had been correctly drawn for $3,456 to pay for office supplies but was erroneously entered in the accounting records as $3,465.
d. Two memoranda are enclosed with the statement and are unrecorded at the time of the reconciliation. The first is for a $762.50 charge that dealt with an NSF check for $745 received from a customer, Titus Industries, in payment of its account. The bank assessed a $17.50 fee for processing it. The second is $99 in miscellaneous expenses for check printing.
e. The bank statement shows that the bank collected $19,000 cash on a note receivable for the company, deducted a $20 collection expense, and credited the balance to the company’s Cash account. Severino did not record this transaction before receiving the statement.
f. Severino’s December 31 daily cash receipts of $9,583.10 were placed in the bank’s night depository on that date but do not appear on the December 31 bank statement.
2. Prepare the journal entries (in dollars and cents) necessary to bring the company’s book balance of cash into conformity with the reconciled cash balance as of December 31, 2017.
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