Which of the following is not a factor that influences a business's control environment?
a.personnel policies
b.proofs and security measures
c.management's philosophy and operating style
d.organizational structure
Accompanying the bank statement was a debit memo for an NSF check received from a customer. What entry is required in the company's accounts?
a.debit Cash; credit Other Income
b.debit Cash; credit Accounts Receivable
c.debit Other Income; credit Cash
d.debit Accounts Receivable; credit Cash
Entries are made to the petty cash account when
a.recording shortages in the fund
b.making payments out of the fund
c.replenishing the petty cash fund
d.establishing the fund
Bank Reconciliation
The following data were accumulated for use in reconciling the bank account of Mathers Co. for July:
1. Cash balance according to the company's records at July 31 $19,270.
2. Cash balance according to the bank statement at July 31, $20,360.
3. Checks outstanding, $3,910.
4. Deposit in transit, not recorded by bank, $3,140.
5. A check for $590 in payment of an account was erroneously recorded in the check register as $950.
6. Bank debit memo for service charges, $40.
a. Prepare a bank reconciliation, using the format shown in Exhibit 14.
Mathers Co. |
|
Bank Reconciliation |
|
July 31 |
|
Cash balance according to bank statement |
$ |
Adjusted balance |
$ |
Cash balance according to company's records |
$ |
Adjusted balance |
$ |
b. If the balance sheet is prepared for Mathers
Co. on July 31, what amount should be reported for cash?
$
c. Must a bank reconciliation always balance
(reconcile)?
Answer 1
b.proofs and security measures
Answer 2
d.debit Accounts Receivable; credit Cash
Answer 3
d.establishing the fund
Answer 4
Mathers Co.
Bank Reconciliation
July 31
Particulars Amount ($) Cash balance according to bank statement 20,360 Add: Deposit in transit 3,140. Less : Checks outstanding (3,910) Adjusted balance 19,590 Cash balance according to company's records 19,270. Add: Rectification of error check in payment ($950 - $590) 360 Less : Bank service charges not recorded in books (40) Adjusted balance 19,590Answer b . Mathers Co. on July 31, amount should be reported for cash in the balance sheet = $19,590
Answer c . Yes, a bank reconciliation always balance.
Explanation : The primary objective to prepare a a bank reconciliation is that after taking into account the errors & other adjustments the adjusted bank balance must match with adjusted cash balance
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