Transcript nobles finmgr5 demoppt 07

Chapter 7
Internal
Control and
Cash
Demonstration
Problems
Copyright © 2016 Pearson Education, Inc.
7-1
Demonstration of E7-16
Wave Dance Studio created a $500 imprest petty cash fund. During the month,
the fund custodian authorized and signed petty cash tickets as follows:
Petty Cash
Ticket No.
1
2
3
4
5
Item
Delivery of programs to customers
Mail package
Newsletter
Key to closet
Copier paper
Account Debited
Amount
Delivery Expense
$30
Postage Expense
20
Printing Expense
50
Miscellaneous Expense
75
Office Supplies
100
Requirements
1.
Make the general journal entry to create the petty cash fund.
2.
Make the general journal entry to record the petty cash fund replenishment. Cash in
the fund totals $150.
3.
Assume that Wave Dance Studio decides to decrease the petty cash fund to $300.
Make the general journal entry to record this decrease.
Copyright © 2016 Pearson Education, Inc.
7-2
Demonstration of E7-16-Req. 1
Make the general journal entry to create the petty cash fund.
Date
1.
Accounts and Explanation
Petty Cash
Debit
Credit
500
500
Cash
To open the petty cash fund.
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7-3
Demonstration of E7-16-Req. 2
Make the general journal entry to record the petty cash fund replenishment. Cash in the
fund totals $150.
Date
2.
Accounts and Explanation
Debit
Delivery Expense
30
Postage Expense
Printing Expense
20
Miscellaneous Expense
75
Credit
50
Office Supplies
100
Cash Short & Over
Cash ﴾$500 − $150﴿
75
350
To replenish the petty cash fund.
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7-4
Demonstration of E7-16-Req. 3
Assume that Wave Dance Studio decides to decrease the petty cash fund to $300. Make
the general journal entry to record this decrease.
Date
3.
Accounts and Explanation
Cash
Debit
Credit
200
Petty Cash
200
To decrease the petty cash fund to $300.
Copyright © 2016 Pearson Education, Inc.
7-5
Demonstration of E7-19
Peter Publishers' check book lists the following:
Date
Check No.
Aug. 1
4
701
9
13
702
14
703
18
704
26
705
28
706
30
Item
Check Deposit Balance
$1,000
Quick Mailing
$500
500
Service Revenue
$2,000
2,500
Salaries Expenses
250
2,250
Utilities
150
2,100
Cash
75
2,025
Office Supplies
85
1,940
Alpha Printers
300
1,640
Service Revenue
1,500
3,140
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7-6
Demonstration of E7-19
Peter’s August bank statement shows the following:
Balance
Deposits
Debit Checks:
$1,000
2,000
No.
701
702
703
704
Amount
$500
250
175 *
75
Other charges:
Printed checks
Service charge
Balance
50
25
(1,000)
(75)
$1,925
*This is the correct amount for check number 703.
Requirements
1.
Prepare Peter Publisher's bank reconciliation at August 31, 2016.
2.
How much cash does Peter actually have on August 31, 2016?
3.
Journalize any transactions required from the bank reconciliation.
Copyright © 2016 Pearson Education, Inc.
7-7
Demonstration of E7-19-Req. 1
Calculation of ending book balance:
Aug. 1 Book Balance
Add: Deposits ($2,000 + $1,500)
Less: Checks ($500 + $250 + $150 + $75 + $85 + $300)
Aug. 31 Book Balance
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$1,000
3,500
1,360
$3,140
7-8
Demonstration of E7-19-Req. 1
PETER PUBLISHERS
Bank Reconciliation
August 31, 2016
BANK
BOOK
Balance, August 31, 2016 [Previous slide]
ADD:
$3,140
3,140
LESS:
Book error check 703
Printed checks
Service charge
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$25
50
25
100
7-9
Demonstration of E7-19-Req. 1
PETER PUBLISHERS
Bank Reconciliation
August 31, 2016
BANK
BOOK
Balance, August 31, 2016
ADD:
$3,140
3,140
LESS:
Book error check 703
Printed checks
Service charge
Adjusted book balance, August 31, 2016
Copyright © 2016 Pearson Education, Inc.
$25
50
25
100
$3,040
7-10
Demonstration of E7-19-Req. 1
PETER PUBLISHERS
Bank Reconciliation
August 31, 2016
BANK
Balance, August 31, 2016
ADD:
Deposit in transit
BOOK
$1,925
Balance, August 31, 2016
ADD:
$3,140
1,500
3,425
3,140
LESS:
Book error check 703
Printed checks
Service charge
Adjusted book balance, August
31, 2016
Copyright © 2016 Pearson Education, Inc.
$25
50
25
100
$3,040
7-11
Demonstration of E7-19-Req. 1
PETER PUBLISHERS
Bank Reconciliation
August 31, 2016
BANK
BOOK
Balance, August 31, 2016
ADD:
Deposit in transit
LESS:
Outstanding checks
Check 707
Check 708
$1,925
Balance, August 31, 2016
ADD:
$3,140
1,500
3,425
$85
300
385
3,140
LESS:
Book error check 703
Printed checks
Service charge
Adjusted book balance, August
31, 2016
Copyright © 2016 Pearson Education, Inc.
$25
50
25
100
$3,040
7-12
Demonstration of E7-19-Req. 1
PETER PUBLISHERS
Bank Reconciliation
August 31, 2016
BANK
BOOK
Balance, August 31, 2016
ADD:
Deposit in transit
LESS:
Outstanding checks
Check 707
Check 708
Adjusted bank balance, August
31, 2016
$1,925
Balance, August 31, 2016
ADD:
$3,140
1,500
3,425
$85
300
385
$3,040
3,140
LESS:
Book error check 703
Printed checks
Service charge
Adjusted book balance, August
31, 2016
Copyright © 2016 Pearson Education, Inc.
$25
50
25
100
$3,040
7-13
Demonstration of E7-19-Req. 2
PETER PUBLISHERS
Bank Reconciliation
August 31, 2016
BANK
BOOK
Balance, August 31, 2016
ADD:
Deposit in transit
LESS:
Outstanding checks
Check 707
Check 708
Adjusted bank balance, August
31, 2016
$1,925
Balance, August 31, 2016
ADD:
$3,140
1,500
3,425
$85
300
385
$3,040
3,140
LESS:
Book error check 703
Printed checks
Service charge
Adjusted book balance, August
31, 2016
$25
50
25
100
$3,040
Peter has $3,040 on August 31, 2016.
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7-14
Demonstration of E7-19-Req. 3
Date
Accounts and Explanation
Aug. 31 Utilities Expense
Debit
Credit
25
25
Cash
To record check error #703.
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7-15
Demonstration of E7-19-Req. 3
Date
Accounts and Explanation
Aug. 31 Utilities Expense
Debit
Credit
25
25
Cash
To record check error #703.
31 Bank Expense
50
50
Cash
To record printed check charge incurred.
Copyright © 2016 Pearson Education, Inc.
7-16
Demonstration of E7-19-Req. 3
Date
Accounts and Explanation
Aug. 31 Utilities Expense
Debit
Credit
25
25
Cash
To record check error #703.
31 Bank Expense
50
50
Cash
To record printed check charge incurred.
31 Bank Expense
25
25
Cash
To record bank service charges incurred.
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7-17
Demonstration of E7-20
Robin Knight Company operates four bowling alleys. The owner just received
the September 30 bank statement from City National Bank, and the statement
shows an ending balance of $1,000. Listed on the statement are an EFT rent
collection of $300, a service charge of $15, NSF checks totalling $60, and a
$25 charge for printed checks. In reviewing his cash records, Knight identified
outstanding checks totalling $500 and a deposit in transit of $1,500. During
September, he recorded a $250 check by debiting Salaries Expense and
crediting Cash for $50. His Cash account shows a September 30 balance of
$2,000.
Requirements
1.
Prepare the bank reconciliation at September 30.
2.
Journalize any transactions required from the bank reconciliation.
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7-18
Demonstration of E7-20-Req. 1
ROBIN KNIGHT COMPANY
Bank Reconciliation
September 30
BANK
BOOK
Balance, September 30
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$2,000
7-19
Demonstration of E7-20-Req. 1
ROBIN KNIGHT COMPANY
Bank Reconciliation
September 30
BANK
BOOK
Balance, September 30
ADD:
EFT collection on rent
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$2,000
300
2,300
7-20
Demonstration of E7-20-Req. 1
ROBIN KNIGHT COMPANY
Bank Reconciliation
September 30
BANK
BOOK
Balance, September 30
ADD:
EFT collection on rent
LESS:
Correction of book error $200
NSF checks
60
Printed checks
25
Service charge
15
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$2,000
300
2,300
300
7-21
Demonstration of E7-20-Req. 1
ROBIN KNIGHT COMPANY
Bank Reconciliation
September 30
BANK
BOOK
Balance, September 30
ADD:
EFT collection on rent
$2,000
300
2,300
LESS:
Correction of book error $200
NSF checks
60
Printed checks
25
Service charge
15
300
Adjusted book balance,
September 30
$2,000
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7-22
Demonstration of E7-20-Req. 1
ROBIN KNIGHT COMPANY
Bank Reconciliation
September 30
BANK
Balance, September 30
BOOK
$1,000
Balance, September 30
ADD:
EFT collection on rent
$2,000
300
2,300
LESS:
Correction of book error $200
NSF checks
60
Printed checks
25
Service charge
15
300
Adjusted book balance,
September 30
$2,000
Copyright © 2016 Pearson Education, Inc.
7-23
Demonstration of E7-20-Req. 1
ROBIN KNIGHT COMPANY
Bank Reconciliation
September 30
BANK
Balance, September 30
ADD:
Deposit in transit
BOOK
$1,000
1,500
2,500
Balance, September 30
ADD:
EFT collection on rent
$2,000
300
2,300
LESS:
Correction of book error $200
NSF checks
60
Printed checks
25
Service charge
15
300
Adjusted book balance,
September 30
$2,000
Copyright © 2016 Pearson Education, Inc.
7-24
Demonstration of E7-20-Req. 1
ROBIN KNIGHT COMPANY
Bank Reconciliation
September 30
BANK
Balance, September 30
ADD:
Deposit in transit
BOOK
$1,000
1,500
2,500
LESS:
Outstanding checks
500
Balance, September 30
ADD:
EFT collection on rent
$2,000
300
2,300
LESS:
Correction of book error $200
NSF checks
60
Printed checks
25
Service charge
15
300
Adjusted book balance,
September 30
$2,000
Copyright © 2016 Pearson Education, Inc.
7-25
Demonstration of E7-20-Req. 1
ROBIN KNIGHT COMPANY
Bank Reconciliation
September 30
BANK
Balance, September 30
ADD:
Deposit in transit
BOOK
$1,000
1,500
2,500
LESS:
Outstanding checks
Adjusted bank balance,
September 30
500
$2,000
Balance, September 30
ADD:
EFT collection on rent
$2,000
300
2,300
LESS:
Correction of book error $200
NSF checks
60
Printed checks
25
Service charge
15
300
Adjusted book balance,
September 30
$2,000
Copyright © 2016 Pearson Education, Inc.
7-26
Demonstration of E7-20-Req. 2
Date
Accounts and Explanation
Sept. 30 Cash
Rent Revenue
To record EFT rent collection.
Copyright © 2016 Pearson Education, Inc.
Debit
Credit
300
300
7-27
Demonstration of E7-20-Req. 2
Date
Accounts and Explanation
Sept. 30 Cash
Rent Revenue
To record EFT rent collection.
30 Salaries Expense
Cash
To record error on salary check.
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Debit
Credit
300
300
200
200
7-28
Demonstration of E7-20-Req. 2
Date
Accounts and Explanation
Sept. 30 Cash
Rent Revenue
To record EFT rent collection.
30 Salaries Expense
Cash
To record error on salary check.
30 Accounts Receivable
Cash
To record NSF checks.
Copyright © 2016 Pearson Education, Inc.
Debit
Credit
300
300
200
200
60
60
7-29
Demonstration of E7-20-Req. 2
Date
Accounts and Explanation
Sept. 30 Cash
Rent Revenue
To record EFT rent collection.
30 Salaries Expense
Cash
To record error on salary check.
Debit
300
300
200
200
30 Accounts Receivable
Cash
To record NSF checks.
60
30
25
Bank Expense
Cash
To record printed check charge incurred.
Copyright © 2016 Pearson Education, Inc.
Credit
60
25
7-30
Demonstration of E7-20-Req. 2
Date
Accounts and Explanation
Sept. 30 Cash
Rent Revenue
To record EFT rent collection.
30 Salaries Expense
Cash
To record error on salary check.
Debit
300
300
200
200
30 Accounts Receivable
Cash
To record NSF checks.
60
30
Bank Expense
Cash
To record printed check charge incurred.
25
Bank Expense
Cash
To record bank service charges incurred.
15
30
Copyright © 2016 Pearson Education, Inc.
Credit
60
25
15
7-31
End of Chapter 7
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7-32