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INTERNAL_CONTROLAND_CASH-4

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					               CHAPTER 8


          INTERNAL
           CONTROL
          AND CASH
          Accounting Principles, Eighth Edition

Chapter
  8-1
    Use of a Bank
    Use of a Bank
    E8-11 The following information pertains to Family Video Company.
    •     Cash balance per bank, July 31, $7,263.
    •     Cash balance per books, July 31, $7,284.
    •     July bank service charge not recorded by the depositor $28.
    •     Deposits in transit, July 31, $1,500.
    •     Bank collected $900 note for Family in July, plus interest $36,
          less fee $20.The collection has not been recorded by Family, and
          no interest has been accrued.
    •     Outstanding checks, July 31, $591.
    Instructions
    a) Prepare a bank reconciliation at July 31.
    b) Journalize the adjusting entries at July 31 on the books of Family
       Video Company.
Chapter
  8-2                                          LO 7 Prepare a bank reconciliation.
    Use of a Bank
    Use of a Bank
    E8-11 a) Prepare a bank reconciliation at July 31.
          Cash balance per bank statement                   $7,263
          Add:     Deposit in transit                        1,500
          Less:    Outstanding checks                         (591)
          Adjusted cash balance per bank                    $8,172

          Cash balance per books                            $7,284
          Add:    Collection of notes receivable               900
                   Collection of interest                        36
          Less:    Bank service charge                          (28)
                   Note collection fee                          (20)
          Adjusted cash balance per books                   $8,172

Chapter
  8-3                                       LO 7 Prepare a bank reconciliation.
    Use of a Bank
    Use of a Bank
    E8-11 b) Journalize the adjusting entries at July 31 on
    the books of Family Video Company.      Dr.       Cr.
    July 31       Miscellaneous expense      28
                          Cash                                  28
    July 31        Cash                                   916
                   Miscellaneous expense                   20
                    Interest revenue                             36
                     Notes receivable                           900
      Note: Adjusting journal entry includes only the
      adjustments to the cash balance per books.

Chapter                See another illustration page 358-360
  8-4
    Use of a Bank
    Use of a Bank

     Review Question
          The reconciling item in a bank reconciliation that
          will result in an adjusting entry by the depositor
          is:
          a. outstanding checks.
          b. deposit in transit.
          c. a bank error.
          d. bank service charges.


Chapter
  8-5                                 LO 7 Prepare a bank reconciliation.
    Use of a Bank
    Use of a Bank

     Review Question
          Which of the following statements correctly
          describes the reporting of cash?
          a. Cash cannot be combined with cash equivalents.
          b. Restricted cash funds may be combined with
             Cash.
          c. Cash is listed first in the current assets
             section.
          d. Restricted cash funds cannot be reported as a
             current asset.
Chapter
  8-6                                  LO 7 Prepare a bank reconciliation.
    Reporting Cash
    Reporting Cash
      Most liquid asset, listed first in current assets
      section of balance sheet.
                                                     Illustration 8-16




           Cash equivalents
           Restricted cash
           Compensating balances
Chapter                         See page 361
  8-7

				
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