Question

y's bank statement for September 30 showed a cash balance of $1,350. The company's Cash September 30. a A customer's check for NSF was charged the company's account a $25 processing fee. $100 marked NSF was returned to Brown Company by the bank. In addition, the bank b. The September 30 cash reccipts, 51,250, were placed in the bank's night depository after banking hours on that date and this amount did not appear on the September 30 bank statement. c. A S15 debit memorandum for checks printed by the bank was included with the canceled checks. d. Outstanding checks amounted to $1,145 e. A customer's note for $900 was collected by the bank. A collection fee of $25 was deducted by the bank and the difference was deposited in the account. f. Included with the canceled checks was a check for S275, drawn on another company, Browne Inc. (a) Prepare a bank reconciliation as of September 30. (b) Prepare any necessary adjusting journal entries necessary as a result of the bank reconciliation. 40. A company established a petty cash fund of $100 on September 1. On September 10, the petty cash fund receipts for: office supplies, S27; was replenished when there was $16 remaining and there courie above transactions in general journal form. were petty cash er, $32; and postage, $22. On September 15, the petty cash fund was increased to $125 in total. Record the 41. A properly designed internal control system is a key part of accounting information systems design, analysis and performance. True False 42. The use of internal controls provides guaranteed protection against losses due to operating activities. True False 43. Maintaining adequate records is an important intemal control principle. True False

Answer 1

Answer to Q#39 (First question in the list):

BROWN COMPANY Bank Reconciliation Statement September 30 Bank Statement Cash balance per bank Add: Deposits in transit Add: Other firm's cancelled check wrongly included $1,350 $1,250 $275 $2,875 $1,145 Company's Books: Cash balance per cash book Add: Customer note collected by bank ($900 - $25) $995 $875 $1,870 $15 $100 $25 $1,730 Less: Debit memo Printing Checks Less: NSF Check returned by bank Less: Bank charges - Processing fee on NSF Check Reconciled cash balance Less: Outstanding Checks Reconciled cash balance $1,730 Ajusting Entries: Date Account Titles and Explanation Debit Credit $875 NOTE: Nov. 30 Cash Miscellaneous Expense Adjusting entries in company's books are required to be passed only for those transactions which would affect company records' balance. In other words, 25 Note Receivable To record collection of receivables by EFT $900 Nov. 30Miscellaneous Expense $40 $25+$15 transactions which would affect bank records shall not $40 Cash To record bank charges for check printing & processin be recorded in company's books of accounts. So, the outstanding checks and deposits in transit are not recorded in adjusting entries in firm's books. Nov. 30 Accounts Receivable $100 $100 Cash To record NSF check returned by bank