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Chapter 6: 5QS_g (page 306)

For each of the following items a through g, indicate whether its amount (1) affects the bank or book side of a bank reconciliation, (2) represents an addition or a subtraction in a bank reconciliation, and (3) requires an adjusting journal entry.

Bank or Book Side Add or Subtract Adj. Entry or Not

g. Outstanding deposits. . . . . . . . . . . . . . .

Short Answer

Expert verified

Answer

  1. The Bank side will be affected

  2. Represents addition is a bank reconciliation statement

  3. No adjustment is required in a journal entry

Step by step solution

01

Step-by-Step SolutionStep 1: Meaning of Outstanding Deposits

Outstanding deposits are the amount of the deposit that is recorded by an individual or an entity in books but not yet has been recorded in a bank.

02

Effect of transaction


Bank or Book

Add or subtract

Adj. Entry or Not

Interest on cash balance

Bank

Add

No adjustment required

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Most popular questions from this chapter

Blues Music Center had the following petty cash transactions in March of the current year. March 5 Wrote a \(250 check, cashed it, and gave the proceeds and the petty cashbox to Jen Rouse, the petty cashier.

6 Paid \)12.50 COD shipping charges on merchandise purchased for resale, terms FOB shipping point. Blues uses the perpetual system to account for merchandise inventory.

11 Paid \(10.75 in delivery expense on merchandise sold to a customer, terms FOB destination.

12 Purchased office file folders for \)14.13 that are immediately used.

14 Reimbursed Bob Geldof, the manager, \(11.65 for office supplies purchased and used.

18 Purchased office printer paper for \)20.54 that is immediately used.

27 Paid \(45.10 COD shipping charges on merchandise purchased for resale, terms FOB shipping point.

28 Paid postage expense of \)18.

30 Reimbursed Geldof \(56.80 for mileage expense.

31 Cash of \)61.53 remained in the fund. Sorted the petty cash receipts by accounts affected and

exchanged them for a check to reimburse the fund for expenditures.

31 The petty cash fund amount is increased by \(50 to a total of \)300.

Required

1. Prepare the journal entry to establish the petty cash fund.

For each of the following items a through g, indicate whether its amount (1) affects the bank or book side of a bank reconciliation, (2) represents an addition or a subtraction in a bank reconciliation, and (3) requires an adjusting journal entry.

Bank or Book Side Add or Subtract Adj. Entry or Not

a. Interest on cash balance . . . . . . . . . . . . . . .

What is a petty cash receipt? Who should sign it?

Some of Crown Company’s cash receipts from customers are received by the company with the regular mail. The company’s recordkeeper opens these letters and deposits the cash received each day.

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For each of these five separate cases, identify the principle(s) of internal control that is violated. Recommend what the business should do to ensure adherence to principles of internal control.

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