Chapter 8Sarbanes-Oxley, InternalControl, and Cash

PRACTICE EXERCISES

PE 8–2A

Appears on the Bank Increases or Decreases
Statement as a Debit the Balance of the
Item No. or Credit Memo Company’s Bank Account

1 credit memo increases
2 credit memo increases

3 credit memo increases
4 debit memo decreases

PE 8–3A

a. $14,680 as shown below.

Bank section of reconciliation: $19,340 + $2,500 – $7,160 = $14,680
Company section of reconciliation: $6,480 + $8,250 – $50 = $14,680

b. Miscellaneous Expense 50

Cash 50

Cash 8,250

Notes Receivable 8,000

Interest Revenue 250

PE 8–4A

a. Petty Cash 300

Cash 300

b. Store Supplies 120

Miscellaneous Selling Expense 75

Cash Short and Over 10

Cash 205

Exercises

Ex. 8–12

Cash 36,183

Cash Short and Over 14

Sales 36,197

Ex. 8–13

Cash 11,279

Sales 11,256

Cash Short and Over 23

problems

Prob. 8–2A

2010

June 1 Petty Cash 500

Cash 500

12 Cash 13,129

Cash Short and Over 14

Sales 13,115

30 Store Supplies 55

Merchandise Inventory 120

Office Supplies 117

Miscellaneous Administrative Expense 162

Cash Short and Over 8

Cash 462

30 Cash 16,833

Cash Short and Over 17

Sales 16,850

30 Petty Cash 125

Cash 125


Prob. 8–3A

1. INTERACTIVE SYSTEMS

Bank Reconciliation

February 28, 2010

Cash balance according to bank statement $ 13,333

Add deposit of February 28, not recorded by bank 4,500

$ 17,833

Deduct: Outstanding checks $4,118

Bank error in charging check as $145

instead of $415 270 4,388

Adjusted balance $ 13,445

Cash balance according to company’s records $ 7,635

Add: Proceeds of note collected by bank, including

$200 interest $5,200

Error in recording check 630 5,830

$ 13,465

Deduct bank service charges 20

Adjusted balance $ 13,445

2. Cash 5,830

Notes Receivable 5,000

Interest Revenue 200

Accounts Payable—Busser Co. 630

Miscellaneous Administrative Expense 20

Cash 20


Prob. 8–4A

1. FRED’S SPORTS CO.

Bank Reconciliation

June 30, 2010

Balance per bank statement $18,175

Add deposit of June 30, not recorded by bank 4,275

$22,450

Deduct: Outstanding checks $ 6,840

Bank error in charging check as $460

instead of $640 180 7,020

Adjusted balance $15,430

Balance per company’s records $13,065*

Add: Proceeds of note collected by bank,

including $240 interest $ 3,240

Error in recording check 720 3,960

$17,025

Deduct: Check returned because of insufficient

funds $ 1,560

Bank service charges 35 1,595

Adjusted balance $15,430

*Cash balance, June 1 $ 16,515

Plus cash deposited in June 40,150

Less checks written in June (43,600)

Balance per company’s records, June 30 $ 13,065

2. Cash 3,960

Notes Receivable 3,000

Interest Revenue 240

Accounts Payable—Miliski Co. 720

Accounts Receivable—Chim Tech 1,560

Miscellaneous Administrative Expense 35

Cash 1,595

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