Question

1- Hill Company established a petty cash fund of? $500. The first transaction was the purchase of stamps for? $46. Which of the following statements is? CORRECT?

A.

The amount of cash on hand and the cash voucher should be maintained in a cash box or other secure device.

B.

The amount of cash on hand should equal? $454.

C.

The petty cash custodian prepares a petty cash voucher to list the item purchased.

D.

All of the statements are correct.

2-In a bank? reconciliation, a NSF check? is:

A.

added to the bank balance.

B.

added to the book balance.

C.

subtracted from the book balance.

D.

subtracted from the bank balance.

3-The following accounts and balances are taken from Moore? Company's adjusted trial? balance:

Accounts Payable	?$12,000
Accounts Receivable	2900
Accumulated Depreciation	1500
Depreciation Expense	1100
Dividends	2400
Insurance Expense	2600
Interest Revenue	1140
Prepaid Insurance	2020
Retained Earnings	?10,600
Salary Expense	?22,100
Service Revenue	?37,800

What is the ending balance in Retained Earnings after the closing entries are? completed?

A.

?$10,740

B.

?$21,340

C.

?$38,940

D.

?$13,140

Answer 1

1. Option D

Cash on hand = $500 - $46(purchase of stamps) =$454

A person is made responsible for all The petty cash disbursements and purchases using petty cash. He must prepare petty cash vouchers for the purchases. He is responsible for maintaining cash box or secure device

2. Option C

NSF checks are those not honored by bank. As those are bounced checks, they are subtracted from book balance during reconciliation to arrive at correct figure.

3. Option B

Net income = revenues - expenses

(1140+37800) - (1100+2600+22100)

=13140

Addition to retained earnings = Net income - dividends

= 13140-2400

=10740

Ending balance in Retained earnings = opening balance of retained earnings + additional during the year

=10600+10740

=21340