Question

Rick Hall owns a card shop, Hall's Cards. The following cash information is available for the month of August 2018: As of August 31, the bank statement shows a balance of $12,415. The August 31 unadjusted balance in the Cash account of Hall's Cards is $8,074. A review of the bank statement revealed the following information: 1. A deposit of $1,250 on August 31, 2018, does not appear on the August bank statement. 2. It was discovered that a check to pay for baseball cards was correctly written and paid by the bank for $3,900 but was recorded on the books as $4,800. 3. When checks written during the month were compared with those paid by the bank, three checks amounting to $4,765 were found to be outstanding. 4. A debit memo for $74 was included in the bank statement for the purchase of a new supply of checks. Required Prepare a bank reconciliation at the end of August showing the true cash balance. HALL'S CARDS Bank Reconciliation August 31, 2018 Unadjusted Bank Balance, August 31, 2018 True Cash Balance, August 31, 2018 Unadjusted Book Balance, August 31, 2018 True Cash Balance, August 31, 2018

Answer 1

Answer (1) HALL'S CARDS Bank Reconciliation August 31,2018 Unadjusted Bank Balance, August 31,2018 Add : Deposit in transit Subtract: Outstanding check True cash balance August 31,2018 Unadjusted Book Balance, August 31,2018 Add: Error in check Subtract: Service charges True Cash Balance, August 31,2018 $12,415 1,250 (4765) 8900 $8,074 900 (74) 8900 Answer(2) HALL'S CARDS Bank Reconciliation April 30 Unadjusted Bank Balance, April 30 Add : Deposit in transit Subtract: Outstanding check True cash balance April 30 Unadjusted Book Balance, April 30 Add: Interest earned Subtract: NSF checks Subtract: Service charges True Cash Balance, April,30 $34,351 4,240 (10,935) 27656 $28,250 95 (650) (39) 27656 Therefore option (a) is the correct answer Answer(3) Option (c) is the correct answer Reason In order to have effective internal control there should be regular vacation of all the employees not certain employees Answer(4) Option (d) is correct Reason All the above 4 objective are achievable by accounting control