The following petty cash transactions of Green Golf Equipment occurred in May:
May 1 Established a petty cash fund with a $200 balance.
31 The petty cash fund has $18 in cash and $180 in petty cash tickets that were issued to pay for Office Supplies ($81), Delivery Expense ($36), Postage Expense ($54), and Miscellaneous Expense ($9).
The petty cash custodian replenished the fund and recorded the expenses.
Prepare the journal entries.
The petty cash fund account is debited with $200, and the cash account is credited with $200.
The petty cash fund is a fund that is created to meet small expenses.
Petty Cash Fund
(Being to for establishment of petty cash fund)
Cash Short & Over
(Entry for the replenishment of petty cash fund
The first entry is passed on recording the establishment of the petty cash fund.
The second entry is passed for the replenishment of the petty cash fund.
This case is based on an actual situation. Centennial Construction Company, headquartered in Dallas, Texas, built a Rodeway Motel 35 miles north of Dallas. The construction foreman, whose name was Slim Chance, hired the 40 workers needed to complete the project. Slim had the construction workers fill out the necessary tax forms, and he sent their documents to the home office. Work on the motel began on April 1 and ended September 1. Each week,Slim filled out a time card of hours worked by each employee during the week. Slim faxed the time cards to the home office, which prepared the payroll checks on Friday morning. Slim drove to the home office on Friday, picked up the payroll checks, and returned to the construction site. At 5 p.m. on Friday, Slim distributed payroll checks to the workers.
1. Describe in detail the main internal control weakness in this situation. Specify what negative result(s) could occur because of the internal control weakness.
2. Describe what you would do to correct the internal control weakness.
Question: For each of the following items, determine whether the item would be:
a. added to the bank balance
b. subtracted from the bank balance
c. added to the book balance
d. subtracted from the book balance
11. Interest revenue earned
12. NSF check
13. Deposit in transit
14. Service charge
15. Outstanding check
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