1. The Petty Cash Box has 3 vouchers in it (one for taxi fare in the amount of $25, one for courier charges of $18 and one for office treats bought at Tim Hortons for $35. The accountant forgets to make a replenishment entry prior to generating the financial statements for the period. The financial statement implications of this are that:

Net income is understated by $78

No implications as the replenishment can occur anytime and is independent of financial statement generation

Net income is overstated by $78

There is not enough information provided to assess financial statement impact

Income is correctly stated but assets are understated by $78

2.

When doing a firm's bank reconciliation, the automatic payment of $250 to the city each month for water should:

Be added to the balance of the unadjusted bank account on the company's books

Be added to the Balance per bank to get the adjusted balance of cash

Be deducted from the unadjusted bank balance on the company's books

Not be shown because the amount is already shown in the bank statement

None of the above.

3.

The following information was available to the accountant of Horton Company when preparing the monthly bank reconciliation:

Outstanding cheques:	#643 for $502
	#651 for $ 43
Bank service charges	$ 25
Deposits in transit	$190
Interest received from bank	$ 5
Customer cheque returned by bank as NSF	$ 20
Cash balance per bank statement	$975
Cash balance per books (prior to reconciliation)	$660

The amount of cash that should appear on the balance sheet following completion of the reconciliation and adjustment of the accounting records is:

None of the above

$620

$660

$305

$640

4.

At the end of the month of July you close the books of your company and received the bank statement. You are ready to start with the Adjusting journal entries and realized that a bank reconciliation must be performed.

First you collect the data from June 30th reconciliation as follows:

Balance per Bank	$10,000
add: Deposits in Transit	$1,800
deduct: Outstanding Cheques	$(2,200)
Balance per Books	$9,600

Second you close your update your Cash and bank account with all transactions recorded before AJE and you have:

Balance July 31	$12,000
Deposits	$7,300
Cheques	$4,800

Third you look at the bank statement provided by your bank and you see the following:

Balance July 31	$12,430
Deposits	$6,000
Cheques	$4,000
Note collected	$1,000
Bank service charge	$20
NSF cheque	$150
Interest received	$200
Autowithdrawals	$500

Which of the following adjusting journal entries is required after the bank reconciliation has been prepared?

Dr. Cash $500 Cr. Phone Expenses $500 (to reflect the automatic payment of the phone - autowithdraw).

Dr. Cash $20 Cr. bank fees $20 (to reflect bank fees for the month)

Dr. Interest revenue $200. Cr. Cash $200 (to reflect interest earned on bank balance).

None of the others alternatives are correct

Dr Cash $150 Cr. Accounts Receivables $150 (to reflect the NSF cheque)

5.

The following data was extracted from the accounting records of Wise Company: Adjusting journal entries made by Wise after preparing the December bank reconciliation were as follows: dr Cash 1,995.00 dr Bank Service Charges 5.00 cr Notes Receivable 2,000.00 dr Cash 27.00 cr Advertising Expense 27.00 dr Accounts Receivable 450.00 cr Cash 450.00 dr Bank Service Charges Expense 42.50 cr Cash 42.50 Other information: - The Balance Per books November 30 was $18,434.27 - Deposits in transit at December 31 were $2,145.40 - An error made by the bank on the December bank statement was detected. It had charged a cheque written by another bank client (Wiese Company) against Wise Company's bank balance. The Bank has been notified and agrees it is indeed their error. The amount was $30.50 - Outstanding cheques were $1,938.53 - There were no other reconciling items not reflected above The most logical explanation for the $27 entry is:

Wise is an advertising firm and this is payment from a customer

None of the above

Wise is prepaying for some advertising

Correction of an error - Wise correctly mailed a cheque for $869.10 but recorded the cheque in its cash disbursement journal in the amount of $896.10

Correction of an error - Wise overpaid an advertising company doing work for Wise and has received a refund from that company