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During the month of September, Norris Industries issued a check in the amount of $859 to a supplier on account. The check cleared the bank during September. The disbursement was recorded incorrectly as $878. The journal entry to correct this mistake when discovered will include:
[removed]
|
a debit to Accounts Payable for $878. |
|
a credit to Cash for $19. |
|
a credit to Accounts Payable for $19. |
|
a credit to Cash for $878. |
|
a debit to Cash for $59. |
2. A company that uses the net method of recording invoices made a purchase of $1,200 with terms of 3/10, n/30. The entry to record the purchase would include:
[removed]
|
a credit to Cash for $1,164. |
|
a debit to Merchandise Inventory for $1,164. |
|
a debit to Discounts Lost for $36. |
|
a credit to Discounts Lost for $36. |
|
a debit to Cash for $1,164 |
3. In the process of reconciling Marks Enterprises’ bank statement for September, Mr. Marks compiles the following information:
|
Cash balance per company books on September 30 |
$6,430 |
|
Deposits in transit at month-end |
$1,050 |
|
Outstanding checks at month-end |
$610 |
|
Bank charge for printing new checks |
$50 |
|
Note receivable and interest collected by bank on Marks’ behalf |
$710 |
|
A check given to Marks during the month by a customer is returned by the bank as NSF |
$530 |
The adjusted cash balance per the books on September 30 is:
[removed]
|
$6,560 |
|
$6,960 |
|
$7,140 |
|
$7,720 |
|
$6,480 |
4. The following information is taken from Hogan Company’s December 31 balance sheet:
|
Cash and cash equivalents |
$8,400 |
||
|
Accounts receivable |
71,900 |
||
|
Merchandise inventories |
60,700 |
||
|
Prepaid expenses |
4,400 |
||
|
Accounts payable |
$15,600 |
||
|
Notes payable |
86,900 |
||
|
Other current liabilities |
10,000 |
If net credit sales and cost of goods sold for the current year were $690,000 and $367,000, respectively, the firm’s days’ sales uncollected for the year is: (rounded)
[removed]
| 3 |
8 days |
|
32 days |
|
|
10 days |
|
|
72 days |
5. Battel had net sales of $5,000 million and ending accounts receivable of $950 million. Its days’ sales uncollected was (rounded):
[removed]
| 7 |
1 days. |
|
|
14 days. |
||
|
25 days. |
||
|
69 days. |
6. At the end of the day, the cash register’s tape shows $995 but the count of cash in the register is $1,095. The proper entry to account for this excess includes a:
[removed]
|
credit to Cash Over and Short for $100. |
|
credit to Cash for $100. |
|
debit to Petty Cash for $100. |
|
debit to Cash for $100. |
|
debit to Cash Over and Short for $100. |
7. Nattel had net sales of $4,300 million and ending accounts receivable of $500 million. Its days’ sales uncollected was (rounded):
[removed]
|
42 days. |
|
12 days. |
|
29 days. |
|
44 days. |
|
45 days. |
8. During the month of September, Norris Industries issued a check in the amount of $856 to a supplier on account. The check cleared the bank during September. The disbursement was recorded incorrectly as $882. The journal entry to correct this mistake when discovered will include:
[removed]
|
a debit to Cash for $66. |
|
a credit to Cash for $882. |
|
a credit to Cash for $26. |
|
a credit to Accounts Payable for $26. |
|
a debit to Accounts Payable for $882. |
9. Assume that the custodian of a $460 petty cash fund has $68 in coins and currency plus $386 in receipts at the end of the month. The entry to replenish the petty cash fund will include:
[removed]
|
a credit to Cash for $392. |
|
a debit to Cash for $392. |
|
a credit to Cash Over and Short for $5. |
|
a debit to Petty Cash for $386. |
|
a debit to Cash for $318. |
10. Martha Company has an established petty cash fund in the amount of $520. The fund was last reimbursed on November 30. At the end of December, the fund contained the following petty cash receipts:
|
December 4 |
Freight charge for merchandise purchased |
$38 |
|
December 7 |
Freight charge for delivery to customer |
$65 |
|
December 12 |
Purchase of office supplies |
$32 |
|
December 18 |
Donation to charitable organization |
$49 |
If, in addition to these receipts, the petty cash fund contains $320 of cash, the journal entry to reimburse the fund on December 31 will include:
[removed]
|
a debit to Transportation-In of $33. |
|
a credit to Office Supplies of $81. |
|
a credit to Cash Over and Short of $16. |
|
a debit to Cash Over and Short of $16. |
|
a debit to Transportation-Out of $33. |
11. A company that uses the net method of recording invoices made a purchase of $600 with terms of 4/10, n/30. The entry to record the purchase would include:
[removed]
|
a credit to Cash for $576. |
|
a debit to Merchandise Inventory for $576. |
|
a debit to Discounts Lost for $24. |
|
a credit to Discounts Lost for $24. |
|
a debit to Cash for $576. |
12. At the end of the day, the cash register’s record shows $1,350, but the count of cash in the cash register is $1,000. The correct entry to record the cash sales is
[removed]
| Cash over and short350 Sales 350 |
| Cash1,350 Sales 1,350 |
| Cash1,000 Cash over and short350 Sales 1,350 |
| Cash1,000 Sales 1,000 |
| Cash1,350 Sales 1,000 Cash over and short 350 |
13. The following information is available for Holland Company at December 31:
|
Money market fund balance |
$2,860 |
|||
|
Certificate of deposit maturing June 30 of next year |
$22,000 |
|||
|
Postdated checks from customers |
$1,490 |
|||
|
Cash in bank account |
$22,800 |
|||
|
NSF checks from customers returned by bank |
$650 |
|||
|
Cash in petty cash fund |
$210 |
|||
|
Inventory of postage stamps |
$25 |
|||
|
U.S. Treasury bill purchased on December 15 and maturing on February 28 of following year |
$14,000 |
Based on this information, Holland Company should report Cash and Cash Equivalents on December 31 of:
[removed]
|
$49,825 |
|
$49,800 |
|
$38,315 |
|
$39,870 |
|
$39,095 |
14. The following information is taken from Hogan Company’s December 31 balance sheet:
|
$8,500 |
|
70,600 |
|
60,300 |
|
4,300 |
|
87,000 |
|
9,300 |
If net credit sales and cost of goods sold for the current year were $620,000 and $368,000, respectively, the firm’s days’ sales uncollected for the year is: (rounded)
[removed]
|
9 days |
|
42 days |
|
70 days |
|
35 days |
15. A company had net sales of $34,000 and ending accounts receivable of $2,900 for the current period. Its days’ sales uncollected equals (rounded):
[removed]
|
31 days. |
|
8 days. |
|
93 days. |
|
32 days. |
16. A company plans to decrease a $210 petty cash fund to $75. The current balance in the account includes $40 petty cash payment in receipts and $160 in currency. The entry to reduce the fund will include a:
[removed]
|
debit to Miscellaneous Expenses for $170. |
|
credit to Cash for $85. |
|
debit to Cash Short and Over for $35. |
|
credit to Petty Cash for $160. |
|
debit to Cash for $85. |
17. A company records purchases using the net method. On February 1, they purchased merchandise inventory on account for $9,200 with terms of 2/10, n/30. The February 1 journal entry to record this transaction would include a:
[removed]
|
debit to Merchandise Inventory of $184. |
|
credit to Accounts Payable of $9,200. |
|
credit to Merchandise Inventory of $184. |
|
debit to Merchandise Inventory of $9,200. |
|
debit to Merchandise Inventory of $9,016. |
18. The following information is available for Holland Company at December 31:
|
$2,890 |
|
$24,000 |
|
$1,440 |
|
$23,250 |
|
$630 |
|
$16,000 |
Based on this information, Holland Company should report Cash and Cash Equivalents on December 31 of: [removed]
|
$42,350 |
|
$40,715 |
|
$52,210 |
|
$43,125 |
|
$52,235 |
19. The following information is available for Johnson Manufacturing Company at June 30:
|
$8,430 |
|
|
$72 |
|
|
$12,600 |
|
|
Petty cash balance |
$420 |
|
$886 |
|
|
Postdated checks received from customers |
$396 |
|
Money orders |
$260 |
|
A nine-month certificate of deposit maturing on December 31 of current year |
Based on this information, Johnson Manufacturing Company should report Cash and Cash Equivalents on June 30 of:
[removed]
|
$29,762 |
|
$21,522 |
|
$21,710 |
|
$21,450 |
|
$21,102 |
20. Merchandise with an invoice price of $2,200 was purchased on October 3, terms 2/15, n/60. The company uses the net method to record purchases. The entry to record the cash payment of this purchase obligation on October 17 is:
[removed]
| Accounts Payable……………………….2,156 Cash………………………………… 2,156 |
| Accounts Payable……………………….2,200 Discounts Lost……………………… 44 Cash………………………………….. 2,156 |
| Accounts Payable……………………….2,200 Cash………………………………….. 2,200 |
| Accounts Payable……………………….2,200 Merchandise Inventory……………. 44 Cash………………………………….. 2,156 |
| Accounts Payable………………………2,200 Merchandise Inventory…………… 88 Cash…………………………………. 2,112 |
21. If a check correctly written and paid by the bank for $806 is incorrectly recorded in the company’s books for $759, how should this error be treated on the bank reconciliation?
[removed]
|
Subtract $47 from the book balance. |
|
Add $47 to the bank’s balance. |
|
Subtract $47 from the bank’s balance and add $47 to the book’s balance. |
|
Subtract $47 from the bank’s balance. |
|
Add $47 to the book balance. |
22. A company plans to decrease a $230 petty cash fund to $80. The current balance in the account includes $50 petty cash payment in receipts and $170 in currency. The entry to reduce the fund will include a:
[removed]
|
credit to Cash for $90. |
|
debit to Cash Short and Over for $30. |
|
debit to Cash for $90. |
|
debit to Miscellaneous Expenses for $180. |
|
credit to Petty Cash for $170. |
23. A company had $60 missing from petty cash that was not accounted for by petty cash receipts. The correct procedure is to:
[removed]
|
credit Petty Cash for $60. |
|
credit Cash for $60. |
|
debit Cash Over and Short for $60. |
|
credit Cash Over and Short for $60. |
|
debit Petty Cash for $ |
24. A company had net sales of $31,000 and ending accounts receivable of $2,300 for the current period. Its days’ sales uncollected equals (rounded):
[removed]
|
6 days. |
|
85 days. |
|
28 days. |
|
27 days. |
25. A company had $56 missing from petty cash that was not accounted for by petty cash receipts. The correct procedure is to:
[removed]
|
credit Petty Cash for $56. |
|
credit Cash Over and Short for $56. |
|
debit Petty Cash for $56. |
|
credit Cash for $56. |
|
debit Cash Over and Short for $56. |
