Question

1. company. issued a check on January 2 to establish a petty cash fund of $500. On January 31, the amount of cash in the petty cash fund is $441. The company would like to issue a check to replenish the fund, based on the following summary of petty cash receipts: Account Amount on Receipt Office Supplies $28.00 Miscellaneous Administrative Expense $23.00 The company’s policy is to record any missing funds in the Cash Short and Over account. The new intern has prepared a proposed journal entry to record the replenishing of the petty cash fund:

date	description	post.ref	debit	credit
jan.31	petty cash		51
	cash			51

Prepare for your discussion with the intern by journalizing the correct entry for the replenishment of the petty cash fund. Refer to the Chart of Accounts for exact wording of account titles

2.

The company’s accounting intern has prepared the end-of-January bank reconciliation from the bank statement, and is worried because the Adjusted Balance amounts do not agree. After reviewing the bank reconciliation, scroll down for the next steps in helping the intern.

Murdstone, Inc.

Bank Reconciliation

January 31, 20Y7

1	Cash balance according to bank statement		$23,557.98
2	Adjustments:
3	Deposit in transit on January 31	$12,125.25
4	Outstanding Check No. 124	(62.00)
5	Outstanding Check No. 125	(57.00)
6	Outstanding Check No. 129	(1,250.00)
7	Total adjustments		10,756.25
8	Adjusted balance		$34,314.23
9
10	Cash balance according to Murdstone, Inc.		$51,545.88
11	Adjustments:
12	Note and interest collected by bank	$15,250.75
13	Check returned because of insufficient funds	(23,475.40)
14	Bank service charge	(250.00)
15	Error in recording Check No. 123	(9,000.00)
16	Total adjustments		(17,474.65)
17	Adjusted balance		$34,071.23

You assist the intern to check source documents, and find that most of the dollar amounts are correct; however, two dollar amounts are incorrect. After reviewing the following table, scroll down for the next steps in helping the intern.

Item	Correct in Intern’s Reconciliation?	If “No,” Corrected Amount
Cash balance according to bank statement	Yes
Deposit in transit on January 31	Yes
Outstanding Check No. 124	Yes
Outstanding Check No. 125	No	$75.00
Outstanding Check No. 129	Yes
Cash balance according to Murdstone, Inc.	Yes
Check returned because of insufficient funds	Yes
Note and interest collected by bank	Yes
Bank service charge	No	$25.00
Murdstone error in recording Check No. 123 as $12,435.00 rather than the correct amount of $21,435.00	Yes

After asking the intern to search for other errors by comparing her reconciliation to prior bank reconciliations prepared by the former accountant, you work together to compute the corrected Adjusted Balance. Enter your answer with two decimal places.

Corrected Adjusted Balance amount:________________

.

Answer 1

Answer 1:

Journal entry for the replenishment of the petty cash fund:

Answer 2:

Corrected Adjusted Balance amount: $34,296.23

Workings are as below: