QN
Solutions Guide: Please reword the answers to essay type parts so as to guarantee that your answer is an original. Do not submit as is
QN.1.The cash account of Reitmeier Corp.reported a balance of $2,500 at August 31. Included were autstanding checks totaling $900 and an august 31 deposit of $500 that did not appear on the bank statement,which came from Synergy Bank,listed an August 31 balance of $3,405..Included in the bank balance was August 30 collection of $550 on account from a customer who pays the bank directly.The bank statement also shows a $ 20 service charge,$10 of interest revenue that Reitmeier earned on its bank balance,and an NSF check for $35.Prepare a bank reconciliation to determine how much cash Reitmeier actually has at August 31?
|Reitmeier Corp. |
|Bank Reconciliation |
|August 31, 20XX |
|BANK |BOOKS |
|Balance, August 31 | $3,405 |Balance, August 31 | $2,500 |
|Add: | |Add: | |
| Deposit in transit | 500 | Bank collection | 550 |
| | 3,905 | Interest revenue | 10 |
| | | | 3,060 |
| | |Less: | |
|Less: | | Service charge |(20) |
| Outstanding checks | (900) | NSF check | (35) |
|Adjusted bank balance | $3,005 |Adjusted book balance | $3,005 |
Reitmeier has cash of $3,005.
QN: 1.I identify 3 electronic control devices used in business. Also show all of the internal control objectives that each electronic device relates to.
|Electronic Device |Objective of Internal Control |
| | |
|1. Electronic sensor for |1. Safeguard assets |
| merchandise | |
| | |
|2. Bar codes |1. Promote operational efficiency |
| |2. Ensure accurate accounting |
| | records |
| | |
|3. Surveillance cameras |1. Safeguard assets |
| |2. Encourage employees to |
| | follow company policy |
QN: 2, The may 31 bank statement of Varian Engineering Associates has just arrived from Carolina First Bank. To prepare the Varian bank reconciliation, you gather the following data: a.)Varian’s Cash account shows a balance of $2,256.14 on May. b.)The May 31 bank balance is $3,374.22 c.)The bank statement shows that Varian earned $38.19 of interest on its bank balance during May. This amount was added to Varian’s bank balance. d.)Varian pays utilities $750 and insurance $ 290 by EFT. e.)The following Varian checks did not clear the bank by May 31 CHECK NO AMOUNT 237 $46.10 288 141.00 291 578.05 293 11.87 294 609.51 295 8.88 296 101.63 f.)The bank statement includes a deposit of $891.17, collected on account by the bank on behalf of Varian. g.)The bank statement lists a $ 10.50 bank service charge. h.)On May 31,the Varian treasurer deposited $16.15,which will appear on the June bank statement. i.)The bank statement includes a $300,00 deposit that Varian did not make. The bank added $300 to Varian’s account for another company’s deposit. j.)The bank statement includes 2 charges for returned checks from customers. One is a $395.00 check received from a customer with the imprint “Unauthorized Signature “The other is a nonsufficient funds check in the amount of $ 146.67 received from another customer. Required: 1. Prepare the bank reconciliation for Varian Engineering Associates. 2. Journalized the May 31 transactions needed to update Varian’s Cash account .Include an explanation for each entry.
Req. 1
|Varian Engineering Associates |
|Bank Reconciliation |
|May 31, 20XX |
|BANK: | | |
| Balance, May 31 | |$3,374.22 |
| Add: Deposit of May 31 in transit | | 16.15 |
| | |3,390.37 |
| Less: Outstanding checks ($46.10 + | | |
| $141.00 + $578.05 + $11.87 + | | |
| $609.51 + $8.88 + $101.63) |$1,497.04 | |
| Correction of bank error, which | | |
| credited our account for the | | |
| deposit of another company | 300.00 | (1,797.04) |
|Adjusted bank balance, May 31 | | $1,593.33 |
| | | |
|BOOKS: | | |
| Balance, May 31 | | $2,256.14 |
| Add: Interest revenue earned on bank | | |
| balance |$ 38.19 | |
| Bank collection of account receivable | 891.17 | 929.36 |
| | | 3,185.50 |
| | | |
| Less: EFT (utilities $750, insurance $290) |$1,040.00 | |
| Service charge | 10.50 | |
| Returned check due to unauthorized | | |
| signature | 395.00 | |
| NSF check | 146.67 | (1,592.17) |
|Adjusted book balance, May 31 | |$1,593.33 |
Req. 2 (entries based on the reconciliation)
|Journal |
|DATE |ACCOUNT TITLES AND EXPLANATION |DEBIT |CREDIT |
| | | | | |
|May |31 |Cash………………………………………………… |38.19 | |
| | | Interest Revenue………………………………. | |38.19 |
| | |Interest earned on bank balance. | | |
| | | | | |
| |31 |Cash………………………………………………… |891.17 | |
| | | Accounts Receivable…………………………. | |891.17 |
| | |Account receivable collected by bank. | | |
| | | | | |
| |31 |Utilities Expense………………………………….. |750.00 | |
| | | Cash……………………………………………... | |750.00 |
| | |Monthly rent. | | |
| | | | | |
| |31 |Insurance Expense………………………………. |290.00 | |
| | | Cash……………………………………………... | |290.00 |
| | |Monthly insurance. | | |
| | | | | |
| |31 |Miscellaneous Expense…………………………. |10.50 | |
| | | Cash……………………………………………... | |10.50 |
| | |Bank service charge. | | |
| | | | | |
| |31 |Accounts Receivable ($395.00 + $146.67)…… |541.67 | |
| | | Cash……………………………………………... | |541.67 |
| | |NSF customer checks returned by bank. | | |
QN:2.After preparing Reitmeier Cor,ps bank reconciliation in QN number one above ,make the company's journal entries for transactions that arise from the bank reconciliation.Include an explaination with each entry
|Aug. |31 |Cash……………………………………….. |550 | |
| | | Accounts Receivable………………... | |550 |
| | |Collection on account. | | |
| | | | | |
| |31 |Cash……………………………………….. |10 | |
| | | Interest Revenue……………………... | |10 |
| | |Interest earned on bank balance. | | |
| | | | | |
| |31 |Miscellaneous Expense………………... |20 | |
| | | Cash……………………………………. | |20 |
| | |Bank service charge. | | |
| | | | | |
| |31 |Accounts Receivable…………………… |35 | |
| | | Cash…………………………………….. | |35 |
| | |NSF check. | | |
.
QN:3.In you own words explain how cash budget works and what it accomplishes with its last few lines of data.
A cash budget starts with the beginning cash balance, adds budgeted cash receipts, and subtracts budgeted cash payments. The result is cash available at the end of the period. By comparing cash available to our budgeted cash balance, we can see whether we have cash available for additional investments, or if we’ll need new financing.
QN:4.California Artichoke Growers(CAG)is a major food cooperative.Suppose CAG bigins 2008 with cash of $ 4million.CAG $95 million.To meet daily cash needs next year,CAG must maintain a cash balance of at least $ 5 million.Prepare the organisation's cash budget for 2008.
|California Artichoke Growers |
|Cash Budget |
|Year 2008 |
| |Millions |
|Cash balance, beginning |$ 4 |
|Estimated cash receipts—total | 97 |
| | 101 |
|Estimated cash payments—total | (95) |
|Cash available (needed) before new financing | 6 |
|Budgeted cash balance needed | (5) |
|Cash available for additional investments |$ 1 |
QN:5.Carrie Ford,an accountant for ,discovers that her supervisor Zach McGregor,made several errors last year.In total,the errors overstated Yellow Pages' net income by 20%.It is not clear whether the errors were deliberate or accidental.What should Ford do?
Ford should report the errors to McGregor because McGregor is Ford’s supervisor, and McGregor is responsible for the errors. If McGregor fails to take action, then Ford should report the errors to the manager of the organization. In any event, outsiders who are relying on ’s financial statements must be made aware of the need to correct the reported net income figure.
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