EXERCISE TWO: BANK RECONCILIATION The June 30 th, balance per bank statement was $6,100. The cash balance per books was $8,140. Outstanding checks amounted to $850, and deposits in transit were $2,500. The bank statement contained an NSF check for $550, a service charge for $25, and a debit memo for direct payment of the telephone bill of $175. In addition, it was discovered that a check to pay for utilities was correctly written and paid by the bank for $150, but was recorded on the books as $510. 1) Prepare a bank reconciliation at June 30 th. 2) Prepare any necessary journal entries. Req. 1 Bank Reconciliation Req. 2 Instructions: Use the T-accounts to complete the following petty cash problem. If you get stuck, review the examples in the text that describe an imprest basis system. Try not to look at the solution on the next page. Swenson Co. established a petty cash fund of $100 on March 1st. On March 31 st the fund contained cash of $13 and receipts for the following: On April 1st, the petty cash fund was replinished. Record the following: On April 1st, the petty cash fund was replinished. Record the following: 1) The entry to establish the fund on March 1st. 2) The entry to recognize the disbursements and replenish the petty cash fund to a $100 on April 1. NOTE: The Petty Cash account always maintains a balance of $100 (in this example) even though the actual balance of cash in the fund may differ throughout the month. Instructions: Use the T-accounts to complete the following petty cash problem. If you get stuck, review the examples in the text that describe an imprest basis system. Try not to look at the solution on the next page. Swenson Co. established a petty cash fund of $100 on March 1st. On March 31 st the fund contained cash of $13 and receipts for the following: On April 1st, the petty cash fund was replinished. Record the following: 1) The entry to establish the fund on March 1 st. 2) The entry to recognize the disbursements and replenish the petty cash fund to a $100 on April 1. NOTE: The Petty Cash account always maintains a balance of $100 (in this example) even though the actual balance of cash in the fund may differ throughout the month. YOU DO NOT NEED TO UPLOAD YOUR COMPLETED EXERCISE AT THIS TIME. Just answer the questions below in the order they are posed by clicking the Submit Answer button. a) After completing Exercise TWO, what is the correct Adjusted balance per the Books? See circle on the printed exercise. Note: This adjusted balance should match the Adjusted Balance per the Bank. ( 10 points for correct answer. No partial credit). b) Does it make sense for the same person who prepares the daily cash deposits for the company to also perform the monthly bank reconciliation (in your answer, be sure to name any specific internal control procedures that may be applicable)? (Up to 5 points). c) Describe the different types of audit opinions. (Up to 5 points)
