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Exam 8: Internal Control and Cash

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Question 41

True/False

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The Sarbanes-Oxley Act applies only to companies whose stock is traded on public exchanges.

A) True
B) False

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Question 42

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Depositing all cash, checks, etc., in a bank and paying with checks is an internal control procedure over cash.

A) True
B) False

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Question 43

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The actual cash received during the week ended June 7 for cash sales was $18,632, and the amount indicated by the cash register total was $18,628. Journalize the entry to record the cash receipts and cash sales.​Journal $\begin{array} { | c | c | c | c | c | } \hline \text { Date } & \text { Description } & \begin{array} { c } \text { Post. } \\\text { Ref. }\end{array} & \text { Debit } & \text { Credit } \\\hline & & & & \\\hline & & & & \\\hline & & & & \\\hline\end{array}$

Match each item to a bank statement adjustment, a company books adjustment, or either. -Interest revenue

Entries are made to the petty cash account when

A $150 petty cash fund has cash of $54 and receipts of $83. The journal entry to replenish the account would include a

The last custodian of the petty cash fund was hospitalized and you have been asked to take stock of the fund and replenish it. When you receive the fund, it has $299 in cash and receipts as follows:​ $\begin{array} { l r } \text { Office supplies } & \$ 295 \\\text { Advertising } & 120 \\\text { Transportation by taxi } & 75\end{array}$ The petty cash fund was established to have $800 in it.Based on what you have found, what journal entry should be recorded to replenish the fund?

Match each item to a bank statement adjustment, a company books adjustment, or either. -Bank charges

A check drawn by a company for $340 in payment of a liability was recorded in the journal as $430. This item would be included on the bank reconciliation as a (n)

Match the following elements of internal control: -Monitoring

The objectives of internal control are to

Identify each of the following reconciling items as (a) an addition to the cash balance according to the bank statement, (b) a deduction from the cash balance according to the bank statement, (c) an addition to the cash balance according to the company's records, or (d) a deduction from the cash balance according to the company's records. Assume that none of the transactions reported by bank debit and credit memos have been recorded by the company. Write "entry" by items that will require a journal entry in the company's accounts. 1.Deposits in transit. 2.Bank service charges. 3.NSF check. 4.Outstanding checks. 5.Check for $690 incorrectly recorded by the company as $960. 6.Check for $420 incorrectly recorded by the company as $240.

The main reason that the bank statement cash balance and the company's cash balance do not initially balance is due to timing differences.

Which of the following items that appeared on the bank reconciliation did not require a journal entry?

Scharf Company is a retailer located in a state without sales tax. The following data were given to you to complete the transactions for the day's sales to be recorded. All cash drawers start with $100 in change.Record the journal entries for EACH cash register to determine the cashier's accuracy. $\begin{array}{lrrrr}&\text { Reg. } 1&\text { Reg. } 2&\text { Reg. } 3&\text { Reg. } 4\\\text { Cash in drawer } & \$ 974.50 & \$ 1,383.66 & \$ 939.46 & \$ 1,137.91 \\\text { Sales reading } & 879.50 & 1,298.16 & 839.46 & 1,030.33 \\\hline \text { Difference }\end{array}$ ​ $\begin{array}{|c|c|c|}\hline \text { Description } & \text { Debit } & \text { Credit } \\\hline & & \\\hline & & \\\hline & & \\\hline & & \\\hline & & \\\hline & & \\\hline & & \\\hline & & \\\hline & & \\\hline & & \\\hline & & \\\hline & & \\\hline & & \\\hline\end{array}$

Using the following information, prepare a bank reconciliation for Candace Co. for May 31: (a)The bank statement balance is $2,936. (b)The cash account balance is $3,194. (c)Outstanding checks amounted to $465. (d)Deposits in transit are $655. (e)The bank service charge is $50. (f)A check for $97 for supplies was recorded as $79 in the ledger.

A check for $342 was erroneously charged by the bank as $432. In order for the bank reconciliation to balance, you must add $90 to the bank statement balance.

Accompanying the bank statement was a debit memo for an NSF check received from a customer. This item would be included on the bank reconciliation as a (n)

Match each item to a bank statement adjustment, a company books adjustment, or either. -Outstanding checks

A check outstanding for two consecutive months will appear only on the first month's bank reconciliation.