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Chapter 7: Q1RQ (page 411)
What is internal control?
Internal control refers to the plans or rulesimplemented by the business entities to promote the efficiency of business operationsand prevent fraud.
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What are the steps taken to ensure control over purchases and payments by check?
Preparing a bank reconciliation
Jim Root Corporation operates four bowling alleys. The business just received the
On October 31, 2018, bank statement from City National Bank, and the statement shows
an ending balance of \(910. Listed on the statement are an EFT rent collection of
\)440, a service charge of \(7, NSF checks totaling \)50, and a \(23 charge for printed
checks. In reviewing the cash records, the business identified outstanding checks totaling
\)440 and a deposit in transit of \(1,800. During October, the business recorded a
\)260 check by debiting Salaries Expense and crediting Cash for \(26. The business’s
Cash account shows an October 31 balance of \)2,144.
Requirements
1. Prepare the bank reconciliation at October 31.
2. Journalize any transactions required from the bank reconciliation.
Journalizing credit card sales 2018
Sep. 1 Recorded National Express credit card sales for \(96,000, net of processor fee of 1%. Ignore Cost of Goods Sold.
15 Recorded ValueMax credit card sales of \)80,000. Processor charges a 1.5% fee. ValueMax charges the fee at the end of the month, therefore Marathon uses the gross method for these credit card sales. Ignore Cost of Goods Sold.
30 ValueMax collected the fees for the month of September. Assume the
September 15 transaction is the only ValueMax credit card sale. Journalize all entries required for Marathon Running Shoes.
When are the only times the Petty Cash account is used in a journal entry?
Accounting for petty cash Jackie’s Dance Studio created a \(220 imprest petty cash fund. During the month, the fund custodian authorized and signed petty cash tickets as follows: Petty Cash Ticket No. Item Account Debited Amount
1 Delivery of programs to customers Delivery Expense \) 20 2 Mail package Postage Expense 10 3 Newsletter Printing Expense 25 4 Key to closet Miscellaneous Expense 40 5 Copier paper Office Supplies 70
Requirements
1. Make the general journal entry to create the petty cash fund. Include an explanation.
2. Make the general journal entry to record the petty cash fund replenishment. Cash in the fund totals \(40. Include an explanation.
3. Assume that Jackie’s Dance Studio decides to decrease the petty cash fund to \)120. Make the general journal entry to record this decrease.
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