Page 364 - Accounting Principles (A Business Perspective)

8. Control of cash

• During May, the bank credited Hughes Company with the proceeds, USD 6,795, of a note which it had
collected for the company. Interest revenue was USD 45 of the total.

• Bank service and collection charges for May amounted to USD 18.
• Comparison of the canceled checks with the check register revealed that one check in the amount as USD
1,458 had been recorded in the books as USD 1,539. The check had been issued in payment of an account
payable.
• A review of the deposit slips with the bank statement showed that a deposit for USD 2,250 of a company
with a similar account number had been credited to the Hughes Company account in error.
• A USD 270 check received from a customer, R. Petty, was returned with the bank statement marked NSF.

• During May, the bank paid a USD 13,500 note of Hughes Company plus interest of USD 135 and charged it
to the company's account per instructions received. Hughes Company had not recorded the payment of this
note.
• An examination of the cash receipts and the deposit tickets revealed that the bookkeeper erroneously
recorded a check from a customer, C. Parker, of USD 1,458 as USD 1,944.
• The bank statement showed a credit to the company's account for interest earned on the account balance in
May of USD 450.
a. Prepare a bank reconciliation as of 2010 May 31.
b. Prepare the journal entry or entries necessary to adjust the accounts as of 2010 May 31.

Problem C The following transactions pertain to the petty cash fund of Carrington Company:
Nov. 2 A USD 450 check is drawn, cashed, and the cash placed in the care of the assistant office manager to be
used as a petty cash fund.
Dec. 17 The fund is replenished. An analysis of the fund shows:
Coins and currency $147.40
Petty cash vouchers for:
Delivery expenses 173.48
Transportation-In 111.12
Postage stamps purchased 15.00
31 The end of the accounting period falls on this date. The fund was not replenished. The fund's contents on this
date consist of:
Coins and currency $ 352.05
Petty cash vouchers for:
Delivery expenses 31.65
Postage stamps purchased 36.30
Employee's IOU 30.00
Present journal entries to record these transactions. Use the Cash Short and Over account for any shortage or
overage in the fund.
Problem D The following transactions relate to the petty cash fund of Jarvis Wrecking Company
Apr. 1 The petty cash fund is set up with a USD 350 cash balance.
19 Because the money in the fund is down to USD 70.20, the fund is replenished.

Petty cash vouchers as follows:
Flowers for hospitalized employee (miscellaneous expense) $84.38
Postage stampls 135.00
Office supplies 46.71
30 The cash in the fund is USD 193.07. The fund is replenished to include petty cash payments in this period's
financial statements. The petty cash vouchers are for the following:

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