2. DMC Company had checks outstanding totaling $18,200 on its June bank reconciliation. In July, DMC Company issued checks totaling $78,900. The July bank statement shows that $71,400 in checks cleared the bank in July. A check from one of DMC Company's customers in the amount of $2,200 was also returned marked "NSF." The amount of outstanding checks on DMC Company's July bank reconciliation should be

a. $7,500.

b. $23,500.

c. $25,700.

d. $27,900.

3. KLM Company had the following reconciling information in preparing its bank reconciliation:

Cash balance per bank, 9/30 $27,000

Note receivable collected by bank 12,800

Outstanding checks 14,000

Deposits in transit 6,000

Bank service charge 350

NSF check 3,900

Determine the cash balance per books (before adjustments) for KLM Company.

a. $19,000.

b. $9,450.

c. $10,450.

d. $8,450.

4. DAD company had checks outstanding totaling $12,800 on its June bank reconciliation. In July, DAD Company issued checks totaling $78,700. The July bank statement shows that $76,600 in checks cleared the bank in July. A check from one of DAD Company's customers in the amount of $1,600 was also returned marked "NSF." The amount of outstanding checks on DAD Company's July bank reconciliation should be

a. $2,100.

b. $13,300.

c. $14,900.

d. $16,500.

5. An aging of a company's accounts receivable indicates that $4,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1700 debit balance, the adjustment to record bad debts for the period will require a

a. debit to Bad Debt Expense for $3,300.

b. debit to Bad Debt Expense for $5,700.

c. debit to Bad Debt Expense for $4,700.

d. credit to Allowance for Doubtful Accounts for $700.

6. Using the percentage-of-receivables method for recording bad debts expense, estimated uncollectible accounts are $23,000. If the balance of the Allowance for Doubtful Accounts is $2,000 credit before adjustment, what is the amount of bad debt expense for that period?

a. $2,000

b. $21,000

c. $23,000

d. $25,000

Answer

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Question (3)

Winnigham Company maintains a petty cash fund for small expenditure. The following transactions occurred over a 2-month period:

1. July 1: Established petty cash fund by writing a check on Cubs Bank for $200.
2. July 15: Replenished the petty cash fund by writing a check. On this date, the fund consists of $4.00 in cash and the following petty cash receipts: Freight-out $94.00, postage expense $43.00, entertainment expense $46.00, and miscellaneous expense $11.00.
3. July 31: Replenished the petty cash fund by writing a check. At this date, the fund consisted of $8.00 in cash and the following petty cash receipts: freight-out $82.00, charitable contributions expense $45.00, postage expense $25.00 and miscellaneous expense $45.00.
4. Aug. 15: Replenished the petty cash fund by writing a check. On this date, the fund consisted of $15.00 in cash and the following petty cash receipts: freight-out $25.00, entertainment expense $10.00, postage expense $35.00, and miscellaneous expense $115.00.
5. Aug. 16: Increased the amount of the petty cash fund to $300 by writing a check.

Instructions (a) Journalize the petty cash transactions.

Answer

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Question (4)

On May 31, 2017, Reber Company had a cash balance per books of $6,781.50. The bank statement from New York State Bank on that date showed a balance of $6,404.60. A comparison of the statement with the Cash account revealed the following facts.

1. The statement included a debit memo of $40 for the printing of additional company checks.

2. Cash sales of $836.15 on May 12 were deposited in the bank. The cash receipts journal entry and the deposit slip were incorrectly made for $886.15. The bank credited Reber Company for the correct amount.

3. Outstanding checks at May 31 totaled $576.25. Deposits in transit were $2,416.15.

4. On May 18, the company issued check No. 1181 for $685 to Lynda Carsen on account. The check, which cleared the bank in May, was incorrectly journalized and posted by Reber Company for $658.

5. A $3,000 note receivable was collected by the bank for Reber Company on May 31 plus $80 interest. The bank charged a collection fee of $20. No interest has been accrued on the note.

6. Included with the cancelled checks was a check issued by Stiner Company to Ted Cress for $800 that was incorrectly charged to Reber Company by the bank.

7. On May 31, the bank statement showed an NSF charge of $680 for a check issued by Sue Allison, a customer, to Reber Company on account.

Instructions

(a) Prepare the bank reconciliation at May 31, 2017.

(b) Prepare the necessary adjusting entries for Reber Company at May 31, 2017.

Answer