Chapter 6 - Cash (Accounting)

1. In the bank reconciliation there is reference to a cheque recorded in ABD's Cash Disbursements Journal as $154 when in fact the amount actually written on the cheque is $145. The latter number is correct. The appropriate reconciling amount in the reconciliation would show as:

a. A deduction in the reconciliation (minus sign in front of the number)

b. It shows both as a deduction and as an addition in the reconciliation

c. None of the above

d. It doesn't show in the reconciliation. It comes from some other source

e. An addition in the reconciliation (i.e., there is a plus sign in front of the number)

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2.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 number that Wise will show for Cash on its December 31 balance sheet is:

a. $20,011.44

b. Some other amount

c. $19,726.40

d. $18,434.27

e. $19,963.77

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3.In the bank reconciliation there is reference to a deposit in transit of $1,000. In the general journal the adjusting entry we would expect to see reflecting the $1,000 deposit in transit would be:

a. dr cash 1,000 and cr sales 1,000

b. dr bank 1,000 and cr cash 1,000

c. None of the above

d. dr cash but nor corresponding credit ( a one sided entry to correct the bank error)

e. dr cash 1,000 and cr cash receipts 1,000

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4.Which of the following is a weak internal control relating to cash management?

a. Annual bank reconciliations prepared by controller

b. Payments made by cheque and never from collections

c. Cash budgets prepared and analyzed for variances regularly

d. Cheques required to be signed by multiple signatories

e. Bank deposits made daily

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5.Deposits in transit shown on the company's bank reconciliation for June:

a. None of the above

b. are shown in both sections of the June reconciliation

c. are not reconciling items on the June bank reconciliation

d. are shown as increases to the general ledger cash account in the bank reconciliation

e. are shown as decreases to the bank balance in the bank reconciliation

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6.For Accurate Co.

The February bank statement shows a balance of $50,000 at February 29^th

Outstanding cheques at February 29th are $20,000

A deposit of $8,000 made on February 28th is in transit and had not cleared the bank by February 29^th

A cheque for $500, actually written by Wrong Co., was erroneously charged by the bank against Accurate's account.

In determining that the outstanding cheques totaled $20,000, Accurate Co.'s bookkeeper preparing the bank reconciliation only needed to look at:

a. None of the others alternatives are correct

b. The January and February bank statements and the January and February cash journal entries

c. The February bank statement and the February cash journal entries showing cheques issued in February

d. The February bank statement, the January bank reconciliation showing cheques outstanding at the end of January, and the February cash journal entries showing cheques issued in February

e. The January bank statement and the January and February cash journal entries showing cheques issued in both January and February

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7.

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 $6,300 deduct: Outstanding Cheques (5.000) Balance per Books E9 00 Second you close your update your Cash and bank account with all transactions recorded before AJE and you have: Deposits $8,500 Cheques $6,500 Third you look at the bank statement provided by your bank and you see the following: Balance July 31 $10,280 Deposits $13000 Cheques $10,000 Note collected $700 Bank service charge$ 50 NSF cheque $1,000 Interest received $180 towithdrawals $250 Which ofthe following items have been deducted from the Cash and Bank account when doing the reconciliation? 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 $6,300 deduct: Outstanding Cheques $(5,000) 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 $11,000 Deposits $8,500 Cheques $6,500 Third you look at the bank statement provided by your bank and you see the following: Balance July 31 $10,280 Deposits $13,000 Cheques $10,000 Note collected $700 Bank service charge $ 50 NSF cheque $1,000 Interest received $180 Autowithdrawals $250 What is the amount of cheques written and paid in July? None of the others alternatives are correct $10,000 O $3,500 $5,000 $6,500The following information relates to Company ABC for June 2015. Cash balance per Bank '23,499 _Emu Interest earned on bank balance 118. 32 Cheque printing charge Outstanding cheque (printing expense) '379 Which of the following is correctly part of the bank reconciliation process for February 2015? 0 Record the outstanding cheque to printing expense $379 0 Add the outstanding cheque of $379 from the balance per bank statement 0 Adjust the cash general ledger to record a debit due to interest earned on bank balance $18.32 0 Add NSF cheque returned to cash balance per general ledger 0 Adjust the general ledger for the NSF fee with a debit to cash of $5.60