ACC 113 Lecture Notes - Lecture 27: Internal Control, Petty Cash, Bank Reconciliation

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tealmammoth179

24 Sep 2020

School

Tunxis Community College

Department

Accounting

Course

ACC 113

Professor

Muccino

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Document Summary

If balances do not agree and the reconciling items are deemed correct, there is a chance that a record keeping error has been made. Reconciliation not only highlights timing differences but also identify errors made by either the bank or the depositor. Bank reconciliations contain adjustments to both ending cash balance for bank and company records. After reconciliation is completed, general journal entries must be prepared for adjustments made to company records. Adjustments necessary to update cash account in relation to correction of company errors and info processed by the bank. No journal entries are needed for adjustments made to the ending bank statement balance. These adjustments reflect items that have already been recorded in a company"s accounts thus no further updating is necessary. Under the petty cash system, a fund is established in making small payments, especially those that are impractical or uneconomical to make by cheque. E. g. taxi fares or miscellaneous office needs.

Related Questions

Bank Reconciliation and Entries

The cash account for Coastal Bike Co. at October 1, 20Y9, indicated a balance of $15,010. During October, the total cash deposited was $75,650 and checks written totaled $70,240. The bank statement indicated a balance of $25,650 on October 31, 20Y9. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items:

Checks outstanding totaled $11,420.

A deposit of $9,300, representing receipts of October 31 had been made too late to appear on the bank statement.

The bank had collected for Coastal Bike Co. $4,920 on a note left for collection. The face of the note was $4,540.

A check for $490 returned with the statement had been incorrectly charged by the bank as $940.

A check for $970 returned with the statement had been recorded by Coastal Bike Co. as $790. The check was for the payment of an obligation to Rack Pro Co. on account.

Bank service charges for October amounted to $50.

A check for $1,130 from Bay View Condos was returned by the bank due to insufficient funds.

Instructions:

1. Prepare a bank reconciliation as of October 31, 20Y9.

Coastal Bike Co.
Bank Reconciliation
October 31, 20Y9
Cash balance according to bank statement		$
Adjustments:
	$


Total adjustments
Adjusted balance		$
Cash balance according to company's records		$
Adjustments:
	$



Total adjustments
Adjusted balance		$

2. Journalize the necessary entries (a.) that increase cash and (b.) that decrease cash. The accounts have not been closed. For a compound transaction, if an amount box does not require an entry, leave it blank.

a. 20Y9 Oct. 31


b. Oct. 31

3. If a balance sheet were prepared for Coastal Bike Co. on October 31, 20Y9, what amount should be reported as cash?
$

harlequinpig685

The cash account for Pala Medical Co. at June 30, 20Y1, indicated a balance of $14,110. The bank statement indicated a balance of $16,730 on June 30, 20Y1. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items:

Checks outstanding totaled $6,020.

A deposit of $6,270, representing receipts of June 30, had been made too late to appear on the bank statement.

The bank collected $3,260 on a $3,100 note, including interest of $160.

A check for $880 returned with the statement had been incorrectly recorded by Pala Medical Co. as $800. The check was for the payment of an obligation to Skyline Supply Co. for a purchase on account.

A check drawn for $30 had been erroneously charged by the bank as $300.

Bank service charges for June amounted to $40.

1. Prepare a bank reconciliation.

Pala Medical Co.

Bank Reconciliation

June 30, 20Y1

Cash balance according to bank statement

Adjustments:

Deposit of June 30, not recorded by bank

Bank error in charging check as $300 instead of $30

Outstanding checks

Total adjustments

Adjusted balance

Cash balance according to company's records

Adjustments:

Proceeds of note collected by bank, including $160 interest

Error in recording check.

Bank service charges

Total adjustments

Adjusted balance

a. 20Y1 June 30	Cash
	Notes Receivable
	Interest Revenue
b. June 30	Accounts Payable-Skyline Supply Co.
	Miscellaneous Expense
	Cash 3. If a balance sheet were prepared for Pala Medical Co. on June 30, 20Y1, what amount should be reported as cash?

grayporcupine689

The cash account for Coastal Bike Co. at October 1, 20Y9, indicated a balance of $34,800. During October, the total cash deposited was $139,523, and checks written totaled $138,774. The bank statement indicated a balance of $43,875 on October 31, 20Y9. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items: A. Checks outstanding totaled $6,340. B. A deposit of $1,643 representing receipts of October 31, had been made too late to appear on the bank statement. C. The bank had collected for Coastal Bike Co. $5,565 on a note left for collection. The face of the note was $5,300. D. A check for $260 returned with the statement had been incorrectly charged by the bank as $620. E. A check for $210 returned with the statement had been recorded by Coastal Bike Co. as $120. The check was for the payment of an obligation to Rack Pro Co. on account. F. Bank service charges for October amounted to $22. G. A check for $1,464 from Bay View Condos was returned by the bank due to insufficient funds. Instructions 1. Prepare a bank reconciliation as of October 31, 20Y9. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. 2. Journalize the necessary entries. Refer to the Chart of Accounts for exact wording of account titles. 3. If a balance sheet were prepared for Coastal Bike Co. on October 31, 20Y9, what amount should be reported as cash?

Adjusted balance
Bank error in charging check as $260 instead of $620
Bank error in charging check as $620 instead of $260
Bank service charges
Check returned because of insufficient funds
Company error in recording note collected by bank
Deposit of October 31, not recorded by bank
Error in recording check
Outstanding checks
Proceeds of note collected by bank, including $265 interest
Total adjustments

1. Prepare a bank reconciliation as of October 31, 20Y9. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Score: 48/112

Coastal Bike Co.

Bank Reconciliation

October 31, 20Y9

1	Cash balance according to bank statement		â
2	Adjustments:
3	â	â
4	â	â
5	â
6
7	Adjusted balance
8
9	Cash balance according to companyâs records
10	Adjustments:
11
12	â
13	â
14
15
16	â

3. If a balance sheet were prepared for Coastal Bike Co. on October 31, 20Y9, what amount should be reported as cash?

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ACC 113 Lecture Notes - Lecture 27: Internal Control, Petty Cash, Bank Reconciliation

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