Question

1. While examining cash receipts information, the accounting department determined the following information: opening cash balance $153, cash on hand $1,148.25, and cash sales per register tape $1,008.39.

Prepare a tabular analysis of the required adjustment based upon the sales register tape and cash on hand. Include margin explanations for the changes in revenues and expenses. (If a transaction results in a decrease in Assets, Liabilities or Stockholders' Equity, place a negative sign (or parentheses) in front of the amount entered for the particular Asset, Liability or Equity item that was reduced.)

Assets	=	Liabilities	+	Stockholders’ Equity
Cash
	=		+	Revenues	-	Expenses
enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount		select an account title                                                          Sales revenueCash over and shortOpening cash balance
enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount		select an account title                                                          Sales revenueCash over and shortOpening cash balance

2. At July 31, Teal Mountain Company has this bank information: cash balance per bank $8,140, outstanding checks $770, deposits in transit $1,245, and a bank service charge $35.

Determine the adjusted cash balance per bank at July 31.

Adjusted cash balance per bank at July 31

$enter the adjusted cash balance per bank at July 31 in dollars

3. Spahn Company has these cash balances: cash in bank $12,742, payroll bank account $6,000, and plant expansion fund cash $25,000.

Explain how each balance should be reported on the balance sheet.

Answer 1

1. The entry will be:

Cash Dr	995.25
Cash over and Short	13.14
To Cash Sales		1008.39

So the equation is,

2.

Adjusted cash balance ($)

Balance as per statement	8,140
Add: Deposits in transit	1,245
Less: outstanding check	(770)
Adjusted bank balance	8,615

3.

• Cash in bank $12,742 -> reported as CASH AND CASH EQUIVALENTS
• Payroll bank account $6,000 -> it is RESTRICTED CASH, A CURRENT ASSET
• Plant expansion fund cash $25,000. -> RESTRICTED CASH, NON CURRENT ASSET.