INSTRUCTIONS: Prepare a bank reconciliation for Jax-Mart based on the following information:
• Balance per bank at 8/30/07, $3,465.50
• Balance per books at 8/30/07, $2,012.87
• Outstanding checks total $2,003.84
• A $1,148.21 deposit was made too late to appear on the bank statement
• The bank collected a $1500 note plus $120 in interest charges
• A check for $110 was returned with the bank statement, but was charged by the bank as $1,100
• A check for $86 was returned with the bank statement but was recorded in the books at $68
• Bank service charges were $15 for August.
Click here for the solution: Prepare a bank reconciliation for Jax-Mart based on the following information
Showing posts with label bank. Show all posts
Showing posts with label bank. Show all posts
Wednesday, October 14, 2015
Wednesday, September 23, 2015
Toyco, a retail toy chain, honors two bank credit cards and makes daily deposits of credit card sales in two credit card bank accounts
12-42 Toyco, a retail toy chain, honors two bank credit cards and makes
daily deposits of credit card sales in two credit card bank accounts.
(Bank A and Bank B). Each day, Toyco batches its credit card sales
slips, bank deposit slips and authorized sales return documents and
sends them to data processing for data entry. Each week detailed
computer printouts of the general ledger credit card cash accounts are
prepared. Credit card banks have been instructed to make an automatic
weekly transfer of cash to Toyco's general bank account. The credit card
banks charge back deposits that include sales to holders of stolen or
expired cards.
The auditor examining Toyco financial statements has obtained copies of the detailed general ledger cash account printouts, a summary of the bank statements and the manually prepared bank reconciliations, all for the week of December 31, as shown here. (see attachment)
Required:
Review the December 31 bank reconciliation and the related information contained in the following schedules and describe what actions the auditor should take to obtain satisfaction for each item on the bank reconciliation. Assume that all amounts are material and that all computations are accurate. Organize your answer sheet as follows, using the code contained on the bank reconciliation:
Code Number Actions to Be Taken by the Auditor to Gain Satisfaction
Click here for the solution: Toyco, a retail toy chain, honors two bank credit cards and makes daily deposits of credit card sales in two credit card bank accounts
The auditor examining Toyco financial statements has obtained copies of the detailed general ledger cash account printouts, a summary of the bank statements and the manually prepared bank reconciliations, all for the week of December 31, as shown here. (see attachment)
Required:
Review the December 31 bank reconciliation and the related information contained in the following schedules and describe what actions the auditor should take to obtain satisfaction for each item on the bank reconciliation. Assume that all amounts are material and that all computations are accurate. Organize your answer sheet as follows, using the code contained on the bank reconciliation:
Code Number Actions to Be Taken by the Auditor to Gain Satisfaction
Click here for the solution: Toyco, a retail toy chain, honors two bank credit cards and makes daily deposits of credit card sales in two credit card bank accounts
Tuesday, September 15, 2015
Record the necessary journal entries from the following bank reconciliation information for July 31, 2011
10. Record the necessary journal entries from the following bank reconciliation information for July 31, 2011:
Bank Balance, July 31, 2011 $36,739
Checkbook Balance, July 31, 2011 36,444
Bank collection of note receivable 1,200 + 165 interest
Bank service charge 35
Deposits in transit 2,400
Outstanding checks 1,245
NSF check from customer 330
Correction of book error (check #456 written for $160, recorded at $610)—gas expense
Click here for the solution: Record the necessary journal entries from the following bank reconciliation information for July 31, 2011
Bank Balance, July 31, 2011 $36,739
Checkbook Balance, July 31, 2011 36,444
Bank collection of note receivable 1,200 + 165 interest
Bank service charge 35
Deposits in transit 2,400
Outstanding checks 1,245
NSF check from customer 330
Correction of book error (check #456 written for $160, recorded at $610)—gas expense
Click here for the solution: Record the necessary journal entries from the following bank reconciliation information for July 31, 2011
Thursday, September 10, 2015
Gordon & Groton, CPA's were the auditors of Bank & Company, a brokerage firm and member of a national stock exchange
Auditing P 5-26 Gordon & Groton, CPA's were the auditors of Bank & Company, a brokerage firm and member of a national stock exchange. Gordon & Groton audited and reported on the financial statements of Bank, which were filed with the Securities and Exchange Commission.
Several of Bank's customers were swindled by a fraudulent scheme perpetrated by Bank's president, who owned 90% of the voting stock of the company. The facts establish that Gordon & Groton were negligent but not reckless or grossly negligent in conduct of the audit, and neither participated in the fraudulent scheme or knew of its existence.
The customers are suing Gordon & Groton under the antifraud provisions of Section10b and Rule 10b-5 of the securities Exchange Act of 1934 for aiding and abetting the fraudulent scheme of the president. The customer’s suit for fraud is predicated exclusively on the nonfeasance of the auditors in failing to conduct a proper audit, thereby failing to discover the fraudulent scheme.
Required:
Answer the following questions, setting forth reasons for any conclusions stated:
a. What is the probable outcome of the lawsuit?
b. What other theory of liability might the customers have asserted?
Click here for the solution: Gordon & Groton, CPA's were the auditors of Bank & Company, a brokerage firm and member of a national stock exchange
Several of Bank's customers were swindled by a fraudulent scheme perpetrated by Bank's president, who owned 90% of the voting stock of the company. The facts establish that Gordon & Groton were negligent but not reckless or grossly negligent in conduct of the audit, and neither participated in the fraudulent scheme or knew of its existence.
The customers are suing Gordon & Groton under the antifraud provisions of Section10b and Rule 10b-5 of the securities Exchange Act of 1934 for aiding and abetting the fraudulent scheme of the president. The customer’s suit for fraud is predicated exclusively on the nonfeasance of the auditors in failing to conduct a proper audit, thereby failing to discover the fraudulent scheme.
Required:
Answer the following questions, setting forth reasons for any conclusions stated:
a. What is the probable outcome of the lawsuit?
b. What other theory of liability might the customers have asserted?
Click here for the solution: Gordon & Groton, CPA's were the auditors of Bank & Company, a brokerage firm and member of a national stock exchange
Tuesday, September 8, 2015
Prepare a table with the following headings for a monthly bank reconciliation dated September 30
ACC 225 Week 8
Exercise 8-6
Prepare a table with the following headings for a monthly bank reconciliation dated September 30:
For each item 1 through 12, place an x in the appropriate column to indicate whether the item should be added to or deducted from the book or bank balance, or whether it should not appear on the reconciliation. If the book balance is to be adjusted, place a Dr. or Cr. in the Adjust column to indicate whether the Cash balance should be debited or credited. At the left side of your table, number the items to correspond to the following list.
1. Bank service charge.
2. Checks written and mailed to payees on October 2.
3. Checks written by another depositor but charged against this company’s account.
4. Principal and interest on a note collected by the bank but not yet recorded by the company.
5. Special bank charge for collection of note in part 4 on this company’s behalf.
6. Check written against the company’s account and cleared by the bank; erroneously not recorded by the company’s recordkeeper.
7. Interest earned on the cash balance in the bank.
8. Night deposit made on September 30 after the bank closed.
9. Checks outstanding on August 31 that cleared the bank in September.
10. NSF check from customer returned on September 25 but not yet recorded by this company.
11. Checks written by the company and mailed to payees on September 30.
12. Deposit made on September 5 and processed by the bank on September 6.
Click here for the solution: Prepare a table with the following headings for a monthly bank reconciliation dated September 30
Exercise 8-6
Prepare a table with the following headings for a monthly bank reconciliation dated September 30:
For each item 1 through 12, place an x in the appropriate column to indicate whether the item should be added to or deducted from the book or bank balance, or whether it should not appear on the reconciliation. If the book balance is to be adjusted, place a Dr. or Cr. in the Adjust column to indicate whether the Cash balance should be debited or credited. At the left side of your table, number the items to correspond to the following list.
1. Bank service charge.
2. Checks written and mailed to payees on October 2.
3. Checks written by another depositor but charged against this company’s account.
4. Principal and interest on a note collected by the bank but not yet recorded by the company.
5. Special bank charge for collection of note in part 4 on this company’s behalf.
6. Check written against the company’s account and cleared by the bank; erroneously not recorded by the company’s recordkeeper.
7. Interest earned on the cash balance in the bank.
8. Night deposit made on September 30 after the bank closed.
9. Checks outstanding on August 31 that cleared the bank in September.
10. NSF check from customer returned on September 25 but not yet recorded by this company.
11. Checks written by the company and mailed to payees on September 30.
12. Deposit made on September 5 and processed by the bank on September 6.
Click here for the solution: Prepare a table with the following headings for a monthly bank reconciliation dated September 30
The following information is available to reconcile Style Co.’s book balance of cash with its bank statement cash balance as of December 31, 2005
Problems 8-4B
The following information is available to reconcile Style Co.’s book balance of cash with its bank statement cash balance as of December 31, 2005:
a. After posting is complete, the December 31 cash balance according to the accounting records is $31,743.70, and the bank statement cash balance for that date is $45,091.80.
b. Check No. 1273 for $1,084.20 and Check No. 1282 for $390.00, both written and entered in the accounting records in December, are not among the canceled checks. Two checks, No. 1231 for $2,289.00 and No. 1242 for $370.50, were outstanding on the most recent November 30 reconciliation. Check No. 1231 is listed with the December canceled checks, but Check No. 1242 is not.
c. When the December checks are compared with entries in the accounting records, it is found that Check No. 1267 had been correctly drawn for $2,435 to pay for office supplies but was erroneously entered in the accounting records as $2,453.
d. Two debit memoranda are enclosed with the statement and are unrecorded at the time of the reconciliation. One debit memorandum is for $749.50 and dealt with an NSF check for $732 received from a customer, Titus Industries, in payment of its account. The bank assessed a $17.50 fee for processing it. The second debit memorandum is a $79.00 charge for check printing. Style did not record these transactions before receiving the statement.
e. A credit memorandum indicates that the bank collected $20,000 cash on a note receivable for the company, deducted a $20 collection fee, and credited the balance to the company’s Cash account. Style did not record this transaction before receiving the statement.
f. Style’s December 31 daily cash receipts of $7,666.10 were placed in the bank’s night depository on that date, but do not appear on the December 31 bank statement.
Required
1. Prepare the bank reconciliation for this company as of December 31, 2005.
2. Prepare the journal entries necessary to bring the company’s book balance of cash into conformity with the reconciled cash balance as of December 31, 2005.
Analysis Component
3. Explain the nature of the communications conveyed by a bank when the bank sends the depositor (a) a debit memorandum and (b) a credit memorandum.
Check (1) Reconciled balance, $50,913.20; (2) Cr. Note Receivable $20,000
Click here for the solution: The following information is available to reconcile Style Co.’s book balance of cash with its bank statement cash balance as of December 31, 2005
The following information is available to reconcile Style Co.’s book balance of cash with its bank statement cash balance as of December 31, 2005:
a. After posting is complete, the December 31 cash balance according to the accounting records is $31,743.70, and the bank statement cash balance for that date is $45,091.80.
b. Check No. 1273 for $1,084.20 and Check No. 1282 for $390.00, both written and entered in the accounting records in December, are not among the canceled checks. Two checks, No. 1231 for $2,289.00 and No. 1242 for $370.50, were outstanding on the most recent November 30 reconciliation. Check No. 1231 is listed with the December canceled checks, but Check No. 1242 is not.
c. When the December checks are compared with entries in the accounting records, it is found that Check No. 1267 had been correctly drawn for $2,435 to pay for office supplies but was erroneously entered in the accounting records as $2,453.
d. Two debit memoranda are enclosed with the statement and are unrecorded at the time of the reconciliation. One debit memorandum is for $749.50 and dealt with an NSF check for $732 received from a customer, Titus Industries, in payment of its account. The bank assessed a $17.50 fee for processing it. The second debit memorandum is a $79.00 charge for check printing. Style did not record these transactions before receiving the statement.
e. A credit memorandum indicates that the bank collected $20,000 cash on a note receivable for the company, deducted a $20 collection fee, and credited the balance to the company’s Cash account. Style did not record this transaction before receiving the statement.
f. Style’s December 31 daily cash receipts of $7,666.10 were placed in the bank’s night depository on that date, but do not appear on the December 31 bank statement.
Required
1. Prepare the bank reconciliation for this company as of December 31, 2005.
2. Prepare the journal entries necessary to bring the company’s book balance of cash into conformity with the reconciled cash balance as of December 31, 2005.
Analysis Component
3. Explain the nature of the communications conveyed by a bank when the bank sends the depositor (a) a debit memorandum and (b) a credit memorandum.
Check (1) Reconciled balance, $50,913.20; (2) Cr. Note Receivable $20,000
Click here for the solution: The following information is available to reconcile Style Co.’s book balance of cash with its bank statement cash balance as of December 31, 2005
Friday, August 21, 2015
Tasha Orin is unable to reconcile the bank balance at January 31
E7-6 Tasha Orin is unable to reconcile the bank balance at January 31. Tasha’s reconciliation is shown here.
Cash balance per bank $3,677.20
Add: NSF check 450.00
Less: Bank service charge 28.00
Adjusted balance per bank $4,099.20
Cash balance per books $3,975.20
Less: Deposits in transit 590.00
Add: Outstanding checks 770.00
Adjusted balance per books $4,155.20
Instructions
(a) What is the proper adjusted cash balance per bank?
(b) What is the proper adjusted cash balance per books?
(c) Prepare the adjusting journal entries necessary to determine the adjusted cash balance per books.
Click here for the solution: Tasha Orin is unable to reconcile the bank balance at January 31
Cash balance per bank $3,677.20
Add: NSF check 450.00
Less: Bank service charge 28.00
Adjusted balance per bank $4,099.20
Cash balance per books $3,975.20
Less: Deposits in transit 590.00
Add: Outstanding checks 770.00
Adjusted balance per books $4,155.20
Instructions
(a) What is the proper adjusted cash balance per bank?
(b) What is the proper adjusted cash balance per books?
(c) Prepare the adjusting journal entries necessary to determine the adjusted cash balance per books.
Click here for the solution: Tasha Orin is unable to reconcile the bank balance at January 31
Friday, August 14, 2015
Let’s assume that you have been asked to calculate risk-based capital ratios for a bank with the following accounts
10. Let’s assume that you have been asked to calculate risk-based capital ratios for a bank with the following accounts:
Cash = $5 million
Government securities = $7 million
Mortgage loans = $30 million
Other loans = $50 million
Fixed assets = $10 million
Intangible assets = $4 million
Loan-loss reserves = $5 million
Owners’ equity = $5 million
Trust-preferred securities = $3 million
Cash assets and government securities are not considered risky. Loans secured by real estate have a 50 percent weighting factor. All other loans have a 100 percent weighting factor in terms of riskiness.
a. Calculate the equity capital ratio.
b. Calculate the Tier 1 Ratio using risk-adjusted assets.
c. Calculate the Total Capital (Tier 1 plus Tier 2) Ratio using risk-adjusted assets.
Click here for the solution: Let’s assume that you have been asked to calculate risk-based capital ratios for a bank with the following accounts
Cash = $5 million
Government securities = $7 million
Mortgage loans = $30 million
Other loans = $50 million
Fixed assets = $10 million
Intangible assets = $4 million
Loan-loss reserves = $5 million
Owners’ equity = $5 million
Trust-preferred securities = $3 million
Cash assets and government securities are not considered risky. Loans secured by real estate have a 50 percent weighting factor. All other loans have a 100 percent weighting factor in terms of riskiness.
a. Calculate the equity capital ratio.
b. Calculate the Tier 1 Ratio using risk-adjusted assets.
c. Calculate the Total Capital (Tier 1 plus Tier 2) Ratio using risk-adjusted assets.
Click here for the solution: Let’s assume that you have been asked to calculate risk-based capital ratios for a bank with the following accounts
Thursday, August 13, 2015
A new bank has vault cash of $1 million and $5 million in deposits held at its Federal Reserve District Bank
P4-1 A new bank has vault cash of $1 million and $5 million in deposits held at its Federal Reserve District Bank.
a. If the required reserves ratio is 8 percent, what dollar amount of deposits can the bank have?
b. If the bank holds $65 million in deposits and currently holds bank reserves such that excess reserves are zero, what required reserves ratio is implied?
Click here for the solution: A new bank has vault cash of $1 million and $5 million in deposits held at its Federal Reserve District Bank
a. If the required reserves ratio is 8 percent, what dollar amount of deposits can the bank have?
b. If the bank holds $65 million in deposits and currently holds bank reserves such that excess reserves are zero, what required reserves ratio is implied?
Click here for the solution: A new bank has vault cash of $1 million and $5 million in deposits held at its Federal Reserve District Bank
Assume a bank has $5 million in deposits and $1 million in vault cash
P4-2 Assume a bank has $5 million in deposits and $1 million in vault
cash. If the bank holds $1 million in excess reserves and the required
reserves ratio is 8 percent, what level of deposits are being held?
Click here for the solution: Assume a bank has $5 million in deposits and $1 million in vault cash
Click here for the solution: Assume a bank has $5 million in deposits and $1 million in vault cash
A bank has $110 million in deposits and holds $10 million in vault cash
P4-3 A bank has $110 million in deposits and holds $10 million in vault cash.
a. If the required reserves ratio is 10 percent, what dollar amount of reserves must be held at the Federal Reserve Bank?
b. How would your answer in Part (a) change if the required reserves ratio was increased to 12 percent?
Click here for the solution: A bank has $110 million in deposits and holds $10 million in vault cash
a. If the required reserves ratio is 10 percent, what dollar amount of reserves must be held at the Federal Reserve Bank?
b. How would your answer in Part (a) change if the required reserves ratio was increased to 12 percent?
Click here for the solution: A bank has $110 million in deposits and holds $10 million in vault cash
Tuesday, July 14, 2015
Classify the following items as (a) an addition to the bank balance, (b) a subtraction from the bank balance
Classify the following items as (a) an addition to the bank balance, (b) a subtraction from the bank balance, (c) an addition to the book balance, or (d) a subtraction from the book balance:
_____ $20 in service charges
_____ A $300 check deposited that was returned NSF
_____ An outstanding check that you wrote for $2,000
_____ A deposit in transit of $5,500
_____ Bank Error: the bank credited your account for a deposit made by another customer
Click here for the solution: Classify the following items as (a) an addition to the bank balance, (b) a subtraction from the bank balance
_____ $20 in service charges
_____ A $300 check deposited that was returned NSF
_____ An outstanding check that you wrote for $2,000
_____ A deposit in transit of $5,500
_____ Bank Error: the bank credited your account for a deposit made by another customer
Click here for the solution: Classify the following items as (a) an addition to the bank balance, (b) a subtraction from the bank balance
Saturday, July 11, 2015
The president of the retailer Prime Products has just approached the company’s bank with a request for a $30,000, 90- day loan
Problem 9-21 The president of the retailer Prime Products has just approached the company’s bank with a request for a $30,000, 90- day loan. The purpose of the loan is to assist the company in acquiring inventories. Because the company has had some difficulty in paying off its loans in the past, the loan officer has asked for a cash budget to help determine whether the loan should be made. The following data are available for the months April through June, during which the loan will be used:
a. April 1, the start of the loan period, the cash balance will be $24,000. Accounts receivable on April 1 will total $140,000, of which $120,000 will be collected during April and $16,000 will be collected during May. The remainder will be uncollectible.
b. Past experience shows that 30% of a month’s sales are collected in the month of sale, 60% in the month following sale, and 8% in the second month following sale. The other 2% represents bad debts that are never collected. Budgeted sales and expenses for the three-month period follow:
April May June
Sales (all on account) $300,000 $400,000 $250,000
Merchandise Purchases $210,000 $160,000 $130,000
Payroll $20,000 $20,000 $18,000
Lease Payments $22,000 $22,000 $22,000
Advertising $60,000 $60,000 $50,000
Equipment Purchases --- --- $65,000 (nothing in the first 2 months)
Depreciation $15,000 $15,000 $15,000
c. Merchandise purchases are paid in full during the month following purchase. Accounts payable for merchandise purchases during March, which will be paid during April, total $140,000
d. In preparing the cash budget, assume that the $30,000 loan will be made in April and repaid in June. Interest on the loan will total $1,200.
Requirement 1:
Prepare a schedule of expected cash collections for April, May, and June, and for the three months in total. (Deficiencies should be preceded by a minus sign when appropriate. Enter all other amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Omit the $ sign in your response.)
Requirement 2:
Prepare a cash budget, by month and in total, for the three-month period. (Negative amounts should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Omit the $ sign in your response.)
Requirement 3:
If the company needs a minimum cash balance of $20,000 to start each month, can the loan be repaid as planned?
Click here for the solution: The president of the retailer Prime Products has just approached the company’s bank with a request for a $30,000, 90- day loan
a. April 1, the start of the loan period, the cash balance will be $24,000. Accounts receivable on April 1 will total $140,000, of which $120,000 will be collected during April and $16,000 will be collected during May. The remainder will be uncollectible.
b. Past experience shows that 30% of a month’s sales are collected in the month of sale, 60% in the month following sale, and 8% in the second month following sale. The other 2% represents bad debts that are never collected. Budgeted sales and expenses for the three-month period follow:
April May June
Sales (all on account) $300,000 $400,000 $250,000
Merchandise Purchases $210,000 $160,000 $130,000
Payroll $20,000 $20,000 $18,000
Lease Payments $22,000 $22,000 $22,000
Advertising $60,000 $60,000 $50,000
Equipment Purchases --- --- $65,000 (nothing in the first 2 months)
Depreciation $15,000 $15,000 $15,000
c. Merchandise purchases are paid in full during the month following purchase. Accounts payable for merchandise purchases during March, which will be paid during April, total $140,000
d. In preparing the cash budget, assume that the $30,000 loan will be made in April and repaid in June. Interest on the loan will total $1,200.
Requirement 1:
Prepare a schedule of expected cash collections for April, May, and June, and for the three months in total. (Deficiencies should be preceded by a minus sign when appropriate. Enter all other amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Omit the $ sign in your response.)
Requirement 2:
Prepare a cash budget, by month and in total, for the three-month period. (Negative amounts should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Omit the $ sign in your response.)
Requirement 3:
If the company needs a minimum cash balance of $20,000 to start each month, can the loan be repaid as planned?
Click here for the solution: The president of the retailer Prime Products has just approached the company’s bank with a request for a $30,000, 90- day loan
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