Rocky Mountain Interiors deposits all cash receipts each Wednesday and Friday in a night depository, after banking hours

PR 8-5A Bank Reconciliation and entries

Rocky Mountain Interiors deposits all cash receipts each Wednesday and Friday in a night depository, after banking hours. The data required to reconcile the bank statement as of July 31 have been taken from various documents and records and are reproduced as follows. The sources of the data are printed in capital letters. All checks were written for payments on account.

BANK RECONCILIATION FOR PRECEDING MONTH (DATED JUNE 30):
Cash balance according to bank statement $9,422.80
Add: Deposit of June 30, not recorded by bank 780.80
$10,203.60
Deducting : Outstanding checks :
No. 580 $310.10
No. 602 85.50
No. 612 92.50
No. 613 137.50 625.60
Adjusted Balance $9,587.00
Cash balance according to company’s records $ 9,605.7
Deduct : Service Charges 27.70
Adjusted Balance $9,587.00

AND SO ON

1. Prepare a bank reconciliation as of July 31. If errors in recording deposits or checks are discovered, assume that the errors were made by the company. Assume that all deposits are from cash sales. All checks are written to satisfy accounts payable.
2. Journalize the necessary entries. The accounts have not been closed.
3. What is the amount of cash that should appear on the balance sheet as of July 31?
4. Assume that a canceled check for $125 has been incorrectly recorded by the bank as $125. Briefly explain how the error would be included in a bank reconciliation and how it should be corrected.

Check: 1. Adjusted Balance: $11,178.59

Click here for the solution: Rocky Mountain Interiors deposits all cash receipts each Wednesday and Friday in a night depository, after banking hours

Kipling Company deposits all receipts and makes all payments by check

Kipling Company deposits all receipts and makes all payments by check. The following information is available from the cash records.

June 30 Bank Reconciliation
Balance per bank $ 7,000
Add: Deposits in transit 1,540
Deduct: Outstanding checks (2,000)
Balance per books $ 6,540
Month of July Results
Balance July 31 Per Bank $8,650 Per Books $9,250
July deposits Per bank 4,500 per books 5,810
July Checks per bank 4,000 per books 3,100
July note collected (not included in July deposits) per bank 1,500 per books—
July bank service charge per bank 15 per books—
July NSF check from a customer, returned by the per bank 335 per books —
(recorded by bank as a charge)

Instructions
(a) Prepare a bank reconciliation going from balance per bank and balance per book to correct cash balance.
(b) Prepare the general journal entry or entries to correct the Cash account

Click here for the solution: Kipling Company deposits all receipts and makes all payments by check

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

David deposits all receipts and makes all payments by check

David deposits all receipts and makes all payments by check. The following information is available from the cash records:

MARCH 31 BANK RECONCILIATION

Balance per bank $26,746
Add: Deposits in transit 2,100
Deduct: Outstanding checks (3,800)
Balance per books $25,046

Month of April Results

Per Bank Per Books

Balance April 30 $27,995 $24,355
April deposits 8,864 14,889
April checks 12,200 16,080
April note collected 3,000 -0-
(not included in April deposits)
April bank service charge 35 -0-
April NSF check of a customer 900 -0-
returned by the bank
(recorded by bank as a charge)

Instructions
Calculate the amount of the April 30:
1. Deposits in transit
2. Outstanding checks


Click here for the solution: David deposits all receipts and makes all payments by check

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

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

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

(Bank reconciliation and entries) Oneida Furniture Company deposits all cash receipts each Wednesday and Friday in a night depository, after banking hours

PR 8-5A Bank reconciliation and entries

Oneida Furniture Company deposits all cash receipts each Wednesday and Friday in a night depository, after banking hours. The data required to reconcile the bank statement as of June 30 have been taken from various documents and records and are reproduced as follows. The sources of the data are printed in capital letters. All checks were written for payments on account.

AND SO ON

Instructions
1. Prepare a bank reconciliation as of June 30. If errors in recording deposits or checks are discovered, assume that the errors were made by the company. Assume that all deposits are from cash sales. All checks are written to satisfy accounts payable.
2. Journalize the necessary entries. The accounts have not been closed.
3. What is the amount of Cash that should appear on the balance sheet as of June 30?
4. Assume that a canceled check for $270 has been incorrectly recorded by the bank as $720. Briefly explain how the error would be included in a bank reconciliation and how it should be corrected.

Check: 1. Adjusted Balance: $13,900.50

Click here for the solution: (Bank reconciliation and entries) Oneida Furniture Company deposits all cash receipts each Wednesday and Friday in a night depository, after banking hours