1. A petty cash fund is generally established in order to

a. pay for all merchandise purchased on account.

b. pay employees wages.

c. make loans internally to employees.

d. pay relatively small expenditures.

2. In preparing its bank reconciliation for the month of October 2020, Red, Inc. has available the following information.

Balance per bank statement, 10/31/20 $105,750

NSF check returned with 10/31/20 bank statement 1,050

Note receivable collected by bank for Red, Inc.

In October along with $75 interest earned on the note 2,680

Deposits in transit, 10/31/20 12,500

Outstanding checks, 10/31/20 7,325

Bank service charges for October 50

What should be the adjusted cash balance at October 31, 2020?

a. $105,750.

b. $110,925.

c. $112,505.

d. $112,555.

3. The cash account shows a balance of $75,000 before reconciliation. The bank statement does not include a deposit of $2,500 made on the last day of the month. The bank statement shows a collection by the bank of $1,400 and a customers check for $500 was returned because it was NSF. A customers check for $750 was recorded on the books as $570, and a check written for $176, payable to a vendor, was recorded as $167. The correct balance in the cash account was

a. $75,000.

b. $75,551

c. $76,071.

d. $76,571.

4. Notification by the bank that an out of town Note Receivable was collected from a customer with Interest for the company would require the company to make the following adjusting entry:

a. Notes Receivable

Cash

b. Cash

Notes Receivable

c. Cash

Notes Receivable

Interest Earned

d. No adjusting entry is necessary.

Important note:

PLEASE SHOW WORK FOR ALL QUESTIONS!