ACC 311 Lecture Notes - Lecture 10: Petty Cash, Financial Statement

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apricotwoodchuck413

31 Mar 2018

School

University of Miami

Department

Accounting Business Administration

Course

ACC 311

Professor

andrewmcmartin

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Document Summary

If company decides that the amount of cash in petty cash fund is excessive, it lowers the fund balance as follows, debit cash, credit petty cash. Make entries to petty cash only to create, increase or decrease. Cash over and short = when petty cash fund fails to prove out. If cash proves out short debit shortage to cash over and short. If cash proves out over credits overage to cash over and short. To maintain accurate financial statements, a company must reimburse funds at end of each accounting period and also when nearly depleted. Petty cash custodian is responsible at all times for amount of the fund on hand. A company should make every effort to have as little cash on hand in the office as possible. Should only have a petty cash fund, the current day"s receipts in a safe. Deposits in transit (added on bank balance)

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The five components to a system of internal controls include all of the following except:

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Question 24 pts

An automobile company testing brakes on new vehicles is part of:

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Question 34 pts

Which account would we debit to open a new petty cash fund?

cash

petty cash

miscellaneous expense

petty cash expense

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Question 44 pts

Our company established a petty cash fund with a balance of $200. We have petty cash receipts for travel expenses that total $125. We have counted petty cash and found that we were $2 short. Which of the following would be included in the entry to replenish the fund?

a credit to petty cash for $127

a debit to travel expenses for $125

a credit to cash over and short for $2

a credit to cash for $125

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Question 54 pts

On a bank reconciliation, which of the following will not appear as a deduction on a bank statement?

deposit

NSF check (non-sufficient funds)

service charge

Payments made by EFT (electronic fund transfer)

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Question 64 pts

Our company received a bank statement with a balance of $10,000. The reconciling items include outstanding checks that totaled $2,000 and a deposit in transit of $1,000. What is the adjusted bank balance after we complete the bank reconciliation?

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Question 74 pts

Our company has decided to write off an uncollectible account of $3,000. What account would we credit to record bad debt expense if our company uses the direct write-off method for bad debts?

bad debt expense

accounts receivable

allowance for doubtful accounts

cash

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Question 84 pts

Where does allowance for doubtful accounts appear on our financial statements?

on balance sheet as a current liability

on income statement as part of cost of goods sold

on balance sheet as a contra asset related to accounts receivable

on the statement of retained earnings as a deduction from net income

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Question 94 pts

At the end of 2018, we have a credit balance of $10,000 in allowance for doubtful accounts before the adjusting entry for bad debts expense. The company uses the percentage of sales method to estimate bad debt expense. The company estimates that 3% of net credit sales will be uncollectible for the year. Net credit sales for the year amounted to $1,000,000. What account and amount would we debit to record the adjusting entry for bad debt expense?

bad debt expense, $30,000

allowance for doubtful accounts, $30,000

bad debt expense, $20,000

accounts receivable, $20,000

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Question 104 pts

On July 1, 2017, our company accepts a 9-month 5% note for $12,000. What account and amount would we debit when we record the year-end adjusting entry on December 31, 2017?

interest revenue, $300

interest revenue, $350

interest receivable, $300

interest receivable, $350

sangriadonkey143

Aresponse with a short explanation is required to recieve thepoints. These questions are multiple choice, I will leave this uphere for awhile

1.)

In comparing thecanceled checks on the bank statement with the entries in theaccounting records, it is found that check number 2889 forDecember's utilities was correctly written and drawn for $595, butwas erroneously entered in the accounting records as $955. Thejournal entry to adjust the books for the bank reconciliation wouldinclude which of the following for this situation?

$955 increase to Cash

$50 increase to Cash and a $150 decrease to Utility Expense

$-360 increase to Cash and a $-360 decrease to Utility Expense

$-360 decrease to Cash and a $-360 decrease to Utility Expense

$50 decrease to Cash and a $50 decrease to Utility Expense

2.)

A company plansto decrease a $185 petty cash fund to $60. The current balance inthe account includes $45 in receipts and $160 in currency. Theentry to reduce the fund will include a:

	Credit to Petty Cash for $160
	Debit to Miscellaneous Expenses for $140
	Debit to Cash Short and Over for $15
	Debit to Cash for $100
	Credit to Cash for $100

3.) At theend of the day, the cash register's record shows $1,350, but thecount of cash in the cash register is $1,130. The correct entry torecord the cash sales for the day is:

Cash	220
Sales		220

Cash	1,350
Sales		1,350

Cash	1,130
Cash over and short	220
Sales		1,350

Cash	1,130
Sales		1,130

Cash	1,350
Sales		1,130
Cash over and short		220

4.)

In comparing thecanceled checks on the bank statement with the entries in theaccounting records, it is found that check number 4234 for April'srent was correctly written and drawn for $3,505 but was erroneouslyentered in the accounting records as $7,300. When preparing theApril bank statement, the company should:

	Add $3,795 to the book balance of cash
	Deduct $3,795 from the book balance of cash
	Add $7,300 to the book balance of cash
	Add $3,895 to the bank statement balance
	Deduct $3,795 from the bank statement balance

5.)

Triple Company'saccountant made an entry that included the following items: debitpostage expense $12.47; debit office supplies expense $27.38,credit to cash over/short $2.24. If the original amount in pettycash is $320, how much was the credit to cash for thereimbursement?

	$39.85
	$42.09
	$282.39
	$37.61
	$320.00

erinmacaw76

Bank reconciliation

June Company provided the following information at month-end:

Cash in bank per bank statement	8,000,000
Deposit in transit	1,200,000
Outstanding checks, including certified check of 200,000	1,500,000
Amount erroneously credited by bank to June's account	150,000
Note collected by bank for June Company, including interest of 100,000	1,100,000
Service charge for the current month	20,000
"NSF/No sufficent fund" checks of customers returned by bank	500,000
Error in recording a check in the book. The correct amount as paid by the bank is 100,000, instead of 200,000 as recorded in the book	100,000
Saving deposit in other bank closed by the Central Bank	1,000,000
Currency and coins on hand	900,000
Petty cash fund	50,000

Please show solution.

1. What is the adjusted cash in bank at month-end?

a. 7,750,000

b. 7,900,000

c. 8,050,000

d. 7,550,000

2. What is the unadjusted cash in bank per ledger at month-end?

a. 7,070,000

b. 7,220,000

c. 7,270,000

d. 7,750,000

3. What total amount of cash should be reported as current asset?

a. 8,700,000

b. 9,700,000

c. 8,020,000

d. 8,850,000

jadedeer104

ACC 311 Lecture Notes - Lecture 10: Petty Cash, Financial Statement

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