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Chapter 7: Q12RQ (page 411)
When are the only times the Petty Cash account is used in a journal entry?
The petty cash account used the transaction of the petty cash fund made.
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What are some common controls used with a bank account?
Preparing a bank reconciliation and journal entries
This problem continues the Crystal Clear Cleaning problem begun in Chapter 2 and
continued through Chapter 6.
In March 2019, Crystal Clear Cleaning opened a new checking account at First
Regional Bank. The bank statement dated March 31, 2019, for Crystal Clear
Cleaning follows:
Beginning Balance, March 1, 2019
Deposits and other credits:
Mar. 2
10
18
20
23 EFT Peg’s Restaurant(1)
(1) Peg’s Restaurant is a customer making a payment on account.
(3) Texas Energy is a utility provider.
(2) Check Art is a company that prints business checks (considered a
bank expense) for Crystal Clear Cleaning.
\(33,000
900
19,000
50,000
350
Checks and other debits:
Mar. 2 EFT to Check Art(2)
Ending balance, March 31, 2019
\) 0
31 Interest Revenue 50
5 Ck#235
9 Ck#237
9 Ck#236
26 Ck#239
10
2,400
1,500
2,900
2,000
28 EFT to Texas Energy(3) 130
29 Ck#240 300
31 Bank service charge 25
103,300
(9,265)
$ 94,035
Crystal Clear Cleaning’s Cash account in the general ledger shows the following
transactions for March:
Cash—First Regional Bank Checking Account
Balance
Deposit
Deposit
Deposit
Deposit
2,400
2,900
1,500
400
2,000
94,870
Mar. 2
10
18
20
31 Deposit
33,000
900
19,000
50,000
1,770
Mar. 2
4
5
10
21
Ck#235
Ck#236
Ck#237
Ck#238
Ck#239
300
300
23
29
Ck#240
Ck#241
Balance
Requirements
1. Prepare the bank reconciliation at March 31, 2019.
2. Journalize any required entries from the bank reconciliation. Post to the CashT-account to verify the balance of the account matches the adjusted book balancefrom the bank reconciliation.
The Scott Sun & Shade Company had the following financial data at December 31, 2018:
Cash and cash equivalents $ 60,000
Total current liabilities 75,000
What is the cash ratio as of December 31, 2018, for Scott Sun & Shade?
Preparing a bank reconciliation
Hardy Photography’s checkbook lists the following:
Date Check No. Item Check Deposit Balance
Nov. 1 \( 500
4 622 Quick Mailing \) 45 455
9 Service Revenue \( 135 590
13 623 Photo Supplies 85 505
14 624 Utilities 45 460
18 625 Cash 50 410
26 626 Office Supplies 110 300
28 627 Upstate Realty Co. 290 10
30 Service Revenue 1,235 1,245
Hardy’s November bank statement shows the following:
Learning Objective 6
1. Adjusted Balance \)1,137
Balance
Deposits
Checks: No. Amount
622 \( 45
623 85
624 105*
625 50
Other charges:
Printed checks
Service charge
Balance
*This is the correct amount for check number 624.
\) 500
135
(285)
(48)
$ 302
23
25
Requirements
1. Prepare Hardy Photography’s bank reconciliation at November 30, 2018.
2. How much cash does Hardy actually have on November 30, 2018?
3. Journalize any transactions required from the bank reconciliation.
Identifying internal control weakness in cash receipts
Pendley Productions makes all sales on credit. Cash receipts arrive by mail. Larry
Chipello, the mailroom clerk, opens envelopes and separates the checks from the
accompanying remittance advices. Chipello forwards the checks to another employee,
who makes the daily bank deposit but has no access to the accounting records.
Chipello sends the remittance advices, which show cash received, to the accounting
department for entry in the accounts. Chipello’s only other duty is to grant sales
allowances to customers. (A sales allowancedecreases the customer’s account receivable.)
When Chipello receives a customer check for \(575 less a \)45 allowance, he records the
sales allowance and forwards the document to the accounting department.
Requirements
1. Identify the internal control weakness in this situation.
2. Who should record sales allowances?
3. What is the amount that should be shown in the ledger for cash receipts?
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