Question 1

In preparing its bank reconciliation at March 31, Mountainview Company has the following information:

What is the proper cash balance at March 31 for balance sheet purposes?

Accepted Answer

$148,200 balance per bank statement + $23,000 deposits in transit - $23,000 outstanding checks - $1,000 bank error correction = $147,200.
$152,000 balance per books - $200 service charge - $4,600 NSF check = $147,200.

Question 2

After completing a bank reconciliation, you are preparing journal entries to agree the New Horizons Company's Cash account balance with the reconciled balance shown on the reconciliation.
Which of the following requires a journal entry?

Accepted Answer

An NSF check, is a check from an individual or company that had an insufficient cash balance in the bank when the holder of the check presented it to the bank for payment. The original entry recorded when the check was received from the customer was a debit to Cash and a credit to Accounts Receivable. This entry needs to be reversed with a debit to Accounts Receivable and a credit to Cash.

Question 3

After completing a bank reconciliation, you are preparing journal entries to agree the Yankee Company's Cash account balance with the reconciled balance shown on the reconciliation.
Which of the following requires a journal entry?

Accepted Answer

A service charge from the bank is a charge not yet recorded by the Yankee Company. A service charge must be recorded as a reduction in the cash balance and as an expense.

Question 4

The bank statement reported an ending balance of $43,860 after deducting $660 in service charges and an addition of $13,500 for a note collected by the bank on the Cherokee Company's behalf. The company books reported an ending balance of $29,070, and determined that deposits in transit equal $16,800 and outstanding checks equal $18,750.
What is the adjusted cash balance?

Accepted Answer

$29,070 balance per books - $660 service charge + $13,500 note collected by the bank
= $41,910 adjusted cash balance.
$43,860 balance per bank statement + $16,800 deposits in transit - $18,750 outstanding checks
= $41,910.

Question 5

The bank statement reported an ending balance of $58,480 after deducting $880 in service charges and an addition of $18,000 for a note collected by the bank on the Bandit Company's behalf. The company books reported an ending balance of $38,760, and determined that deposits in transit equal $22,400 and outstanding checks equal $25,000.
What is the adjusted cash balance?

Accepted Answer

$38,760 balance per books - $880 service charge + $18,000 note collected by the bank
= $55,880 adjusted cash balance.
$58,480 balance per bank statement + $22,400 deposits in transit - $25,000 outstanding checks
= $55,880.

Question 6

In comparing the canceled checks on the bank statement with the entries in the accounting records, O'Brien Company found that check number 4239 for May's rent was correctly written and drawn for $9,855 but was erroneously entered in the accounting records as $9,585.
When preparing the May bank reconciliation, the O'Brien Company should:

Accepted Answer

In order to reconcile to the bank statement, the $270 error ($9,855 - $9,585) in recording check #4239 in the general ledger must be subtracted from the general ledger cash account balance, since $270 more was deducted from the bank account balance, than was deducted in the general ledger.

Question 7

In comparing the canceled checks on the bank statement with the entries in the accounting records, it is found that check number 4239 for May's rent was correctly written and drawn for $6,750 but was erroneously entered in the accounting records as $6,570.
When preparing the May bank reconciliation, the Tammy Company should:

Accepted Answer

In order to reconcile to the bank statement, the $180 error ($6,750 - $6,570) in recording check #4239 in the general ledger must be subtracted from the general ledger cash account balance, since $180 more was deducted from the bank account balance, than was deducted in the general ledger.

Question 8

During its year-end bank reconciliation, Farley Company finds that Check No. 951 was written for $124.05 on the books, but the check was written and cleared the bank for the correct amount, $142.05.
The correct treatment on the bank reconciliation would be:

Accepted Answer

In order to reconcile to the bank statement, the $18.00 error ($142.05 - $124.05) in recording check #951 in the general ledger must be subtracted from the general ledger cash account balance, (and $18.00 must be recoded as an expense [payment]), since $18.00 more was deducted from the bank account balance, than was deducted in the general ledger.

Question 9

During its year-end bank reconciliation, Red River Company finds that Check No. 951 was written for $49.70 on the books, but the check was written and cleared the bank for the correct amount, $94.70.
The correct treatment on the bank reconciliation would be:

Accepted Answer

In order to reconcile to the bank statement, the $45.00 error ($94.70 - $49.70) in recording check #951 in the general ledger must be subtracted from the general ledger cash account balance, (and $45.00 must be recoded as an expense [payment]), since $45.00 more was deducted from the bank account balance, than was deducted in the general ledger.

Question 10

If the Four Corners Company's accountant mistakenly records a deposit of $383 as $838, the error would be shown on the bank reconciliation statement as a:

Accepted Answer

In order to reconcile to the bank statement, the $455 error ($838 - $383) in recording a deposit in the general ledger must be deducted from the general ledger cash account balance, since $455 less was added to the bank account balance, than was added in the general ledger.

Question 11

In preparing its June 30, 2019 bank reconciliation, a company has available the following information:

As of June 30, the company's adjusted cash balance is:

Accepted Answer

$82,950 balance per bank statement + $11,700 deposits in transit - $8,250 outstanding checks = $86,400 adjusted cash balance.

Question 12

In preparing its June 30, 2019 bank reconciliation, a company has available the following information:

As of June 30, the company's adjusted cash balance is:

Accepted Answer

$110,600 balance per bank statement + $15,600 deposits in transit - $11,000 outstanding checks = $115,200 adjusted cash balance.

Question 13

Carl Nickolas Company prepares bank reconciliations that adjust to the correct balance of cash, based on the following:

Determine the adjusted cash balance.

Accepted Answer

$19,794 unadjusted book balance + $3,300 note collected by bank - $162 bank service charge - $54 incorrectly recorded check - $492 NSF check = $22,386 adjusted cash balance.

Question 14

Bash Bowling Company prepares bank reconciliations that adjust to the correct balance of cash, based on the following:

Determine the adjusted cash balance.

Accepted Answer

$6,598 unadjusted book balance + $1,100 note collected by bank - $54 bank service charge - $18 incorrectly recorded check - $164 NSF check = $7,462 adjusted cash balance.

Question 15

Windham Company developed the following reconciling information in preparing its September bank reconciliation:

Using the above information, determine the cash balance per books (before adjustments) for Windham Company.

Accepted Answer

$24,000 cash balance per bank - $12,000 note collected by bank - $18,000 outstanding checks + $9,000 deposits-in-transit + $150 bank service charge + $3,000 NSF check = $6,150 cash balance per books (before adjustments).

Question 16

Heidi Company developed the following reconciling information in preparing its September bank reconciliation:

Using the above information, determine the cash balance per books (before adjustments) for Heidi Company.

Accepted Answer

$32,000 cash balance per bank - $16,000 note collected by bank - $24,000 outstanding checks + $12,000 deposits-in-transit + $200 bank service charge + $4,000 NSF check = $8,200 cash balance per books (before adjustments).

Question 17

On September 30, the books of Goel Company indicates a balance in the Cash account of $11,034. Determine the adjusted balance on the basis of the following reconciling items:
(a)Deposits of cash sales of $972 had been erroneously recorded in the cash receipts journal as $927.
(b)Deposits in transit not recorded by bank, $1,500.
(c)Bank debit memorandum for service charges, $75.
(d)Bank credit memorandum for note collected by bank, $8,550, including $150 interest.
(e)Bank debit memorandum for $654 NSF (not-sufficient-funds) check from Varrat White, a customer.
(f)Checks outstanding, $6,600.

Accepted Answer

$11,034 unadjusted book balance + $8,550 note collected by bank - $75 bank service charge + $45 incorrectly recorded deposit - $654 NSF check = $18,900 adjusted cash balance.

Question 18

On September 30, the books of Ravalli Company indicates a balance in the Cash account of $14,700. Determine the adjusted balance on the basis of the following reconciling items:
(a)Deposits of cash sales of $1,368 had been erroneously recorded in the cash receipts journal as $1,296.
(b)Deposits in transit not recorded by bank, $2,000.
(c)Bank debit memorandum for service charges, $100.
(d)Bank credit memorandum for note collected by bank, $11,400, including $200 interest.
(e)Bank debit memorandum for $872 NSF (not-sufficient-funds) check from Bill Smith, a customer.
(f)Checks outstanding, $8,800.

Accepted Answer

$14,700 unadjusted book balance + $11,400 note collected by bank - $100 bank service charge + $72 incorrectly recorded deposit - $872 NSF check = $25,200 adjusted cash balance.

Question 19

The following information was used in reconciling the bank account for Meyer Company on October 31:

Calculate the Adjusted Book Balance on October 31.

Accepted Answer

$30,000 balance per books - $930 utility bill paid by bank - $60 check printing charge - $1,050 NSF check = $27,960 Adjusted book balance.
$27,480 balance per bank statement + $1,830 deposits in transit - $1,350 outstanding checks = $27,960.

Question 20

The following information was used in reconciling the bank account for Minerva Company on October 31:

Calculate the Adjusted Book Balance on October 31.

Accepted Answer

$40,000 balance per books - $1,240 utility bill paid by bank - $80 check printing charge - $1,400 NSF check = $37,280 Adjusted book balance.
$36,640 balance per bank statement + $2,440 deposits in transit - $1,800 outstanding checks = $37,280.

Quiz 7: Internal Control and Cash

In preparing its bank reconciliation at March 31, Mountainview Company has the following information: What is the proper cash balance at March 31 for balance sheet purposes?

After completing a bank reconciliation, you are preparing journal entries to agree the New Horizons Company's Cash account balance with the reconciled balance shown on the reconciliation. Which of the following requires a journal entry?

After completing a bank reconciliation, you are preparing journal entries to agree the Yankee Company's Cash account balance with the reconciled balance shown on the reconciliation. Which of the following requires a journal entry?

During its year-end bank reconciliation, Farley Company finds that Check No. 951 was written for $124.05 on the books, but the check was written and cleared the bank for the correct amount, $142.05. The correct treatment on the bank reconciliation would be:

During its year-end bank reconciliation, Red River Company finds that Check No. 951 was written for $49.70 on the books, but the check was written and cleared the bank for the correct amount, $94.70. The correct treatment on the bank reconciliation would be:

If the Four Corners Company's accountant mistakenly records a deposit of $383 as $838, the error would be shown on the bank reconciliation statement as a:

In preparing its June 30, 2019 bank reconciliation, a company has available the following information: As of June 30, the company's adjusted cash balance is:

In preparing its June 30, 2019 bank reconciliation, a company has available the following information: As of June 30, the company's adjusted cash balance is:

Carl Nickolas Company prepares bank reconciliations that adjust to the correct balance of cash, based on the following: Determine the adjusted cash balance.

Bash Bowling Company prepares bank reconciliations that adjust to the correct balance of cash, based on the following: Determine the adjusted cash balance.

Windham Company developed the following reconciling information in preparing its September bank reconciliation: Using the above information, determine the cash balance per books (before adjustments) for Windham Company.

Heidi Company developed the following reconciling information in preparing its September bank reconciliation: Using the above information, determine the cash balance per books (before adjustments) for Heidi Company.

The following information was used in reconciling the bank account for Meyer Company on October 31: Calculate the Adjusted Book Balance on October 31.

The following information was used in reconciling the bank account for Minerva Company on October 31: Calculate the Adjusted Book Balance on October 31.