Problem 7-3A Petty cash fund reimbursement and analysis of errors LO4 Capital Irrigation has only a general journal in its accounting system and uses it to record all transactions. However, the company recently set up a petty cash fund to facilitate payments of small items. The follow. ing petty cash transactions were noted by the petty cashier as occurring during April 2023: Apr. 1 Received a company cheque for $300 to establish the petty cash fund. 15 Received a company cheque to replenish the fund for the following expenditures made since April 1 and to increase the fund to $400. a. Paid $82 for janitorial service. b. Purchased office supplies for $78.15. c. Purchased postage stamps for $25.00. d. Paid $92.50 to The County Crier for an advertisement in the newspaper. e. Discovered that $24.35 remained in the petty cash box. 30 The petty cashier noted that $244.95 remained in the fund and decided that the April 15 increase in the fund was too large. Therefore, a company cheque was issued to replenish the fund for the following expenditures made since April 15 and to reduce the fund to $350. f. Purchased office supplies for $94.65. g. Reimbursed office manager for business auto, $45.60. h. Paid $14.80 courier charges to deliver merchandise to a customer. Required Prepare journal entries to record the establishment of the fund on April 1 and its replenishments on April 15 and April 30. Analysis Component: Explain how the company's financial statements would be affected if the petty cash fund were not replenished and no entry were made on April 30. (Hint: The amount of office supplies that appears on a balance sheet is determined by a physical count of the supplies on hand.) Problem 7-7A Preparing a bank reconciliation and recording adjustments LO6 CHECK FIGURE: 1. Adjusted book balance =$31,984 The following information was available to reconcile Montrose Company's book balance of Cash with its bank statement balance as of October 31, 2023: a. After all posting was completed on October 31, the companys Cash account had a \$13,219 debit balance but its bank statement showed a $29,355 balance. b. Cheques #296 for $1,334 and #307 for \$12,754 were outstanding on the September 30 bank reconciliation. Cheque \#307 was returned with the October cancelled cheques, but cheque \#296 was not. It was also found that cheque #315 for $893 and cheque #321 for $2,000, both written in October, were not among the cancelled cheques returned with the statement. c. In comparing the cancelled cheques returned by the bank with the entries in the accounting records, it was found that cheque #320 for the October rent was correctly written for $4,090 but was erroneously entered in the accounting records as $4,900. d. A credit memo enclosed with the bank statement indicated that there was an electronic fund transfer related to a customer payment for $21,400. A $120 bank service charge was deducted. This transaction was not recorded by Montrose before receiving the bank statement. e. A debit memo for \$3,251 listed a \$3,202 NSF cheque plus a \$49 NSF charge. The cheque had been received from a customer, Jefferson Tyler. Montrose had not recorded this bounced cheque before receiving the statement. f. Also enclosed with the statement was a $74 debit memo for bank services. It had not been recorded because no previous notification had been received. g. The October 31 cash receipts, $6,856, were placed in the bank's night depository after banking hours on that date and this amount did not appear on the bank statement. Required 1. Prepare a bank reconciliation for the company as of October 31, 2023. 2. Prepare the general journal entries necessary to bring the company's book balance of Cash into agreement with the reconciled balance. Analysis Component: Assume that an October 31, 2023, bank reconciliation for the company has already been prepared and some of the items were treated incorrectly in preparing the reconciliation. For each of the following errors, explain the effect of the error on (1) the final balance that was calculated by adjusting the bank statement balance, and (2) the final balance that was calculated by adjusting the Cash account balance. a. The company's Cash account balance of $13,219 was listed on the reconciliation as $12,319. b. The electronic fund transfer for the collection of a customer's payment of $21,400 less the $120 collectio fee was added to the bank statement balance. Analysis Component: Explain how the company's financial statements would be affected if the petty cash fund is not replenished and no entry is made on February 28 . (Hint: The amount of Office Supplies that appears on a balance sheet is determined by a physical count of the supplies on hand.) Part 1 Part 2