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Exam 7: Sarbanes-Oxley, Internal Control, and Cash

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Question 21

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The Garden Gate, Inc. reported the following data in its August 31 annual report. Cash and cash equivalents $ 485 625 Cash flow from operations 630,000)a) What is the company's "cash burn" per month? b) What is the company's ratio of cash to monthly cash expenses? c) Interpret the ratio you computed in part 2. What are the implications for The Garden Gate, Inc.?

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a) $630,000/12 = $52,500 per month
b) $4...

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Question 22

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Describe the features of a voucher system and list typical supporting documents for a voucher.

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A voucher system is used to control cash...

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Question 23

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Thompson Corporation gathered the following reconciling information in preparing its October bank reconciliation: $\begin{array} { | l | l | } \hline \text { Cash balance per bank, } 10 / 31 & \\\hline \text { Note receivable collected by bank } & \\\hline \text { Outstanding checks } & \\\hline \text { Deposits-in-transit } & \\\hline \text { Bank service charge } & \\\hline \text { NSF check } & \\\hline\end{array}$ Using the above information, determine the cash balance per books before adjustments) for the Thompson Corporation.

The petty cash fund eliminates the need for a bank checking account.

Accompanying the bank statement was a debit memo for bank service charges. What entry is required in the company's accounts?

The bank statement for Jeffrey Co. indicates a balance of $8,785 on October 31. After the journals for October had been posted, the cash account had a balance of $8,998. a) Cash sales of $945 had been erroneously recorded in the cash receipts journal as $495. b) Deposits in transit not recorded by bank, $778. c) Bank debit memo for service charges, $40. d) Bank credit memo for note collected by bank, $23,985 plus $885 interest. e) Bank debit memo for $756 NSF not sufficient funds) check from Calin Sams, a customer. f) Checks outstanding, $1,860. Record the appropriate journal entries that would be necessary for Jeffrey Co.

Assign the letter to indicate whether the following items would be added or subtracted from the company's books or the bank statement during the construction of a bank reconciliation. -charges for some other company's safe deposit box were posted to your account

Present entries to record the following transactions: a) Established a petty cash fund of $235.00. b) The petty cash fund now has a balance of $42.80. Replenished the fund, based on the following disbursements as indicated by a summary of the petty cash receipts: office supplies, $74.50; miscellaneous administrative expense, $92.75; and miscellaneous selling expense, $18.60. c) Increased the petty cash fund to $300.00.

The amount of the outstanding checks is included on the bank reconciliation as an)

Groceries R Us, Inc. reported the following data in its annual report. Cash and cash equivalents $2,280,000 Cash flow from operations 240,000)a) What is the company's "cash burn" per month? b) What is the company's ratio of cash to monthly cash expenses? c) Interpret the ratio you computed in part 2. What are the implications for Groceries R Us, Inc.?

The bank often informs the company of bank service charges by including a credit memo with the monthly bank statement.

Stephanie Jo Company established a petty cash fund of $300 on May 1. At the end of the month, the petty cash fund has $42 in cash and receipts for postage, $39; entertainment, $146; and office supplies of $70. Prepare the needed journal entries, recording any discrepancy in the cash short and over account.

A bank statement

The following data were gathered to use in reconciling the bank account of Savannah Company: $\begin{array} { | l | l | } \hline \text { Balance per bank } & \\\hline \text { Balance per company records } & \\\hline \text { Bank service charges } & \\\hline \text { Deposit in transit } & \\\hline \text { NSF check } & \\\hline \text { Outstanding checks } & \\\hline\end{array}$ What is the adjusted balance on the bank reconciliation?

Farm Store, Inc. reported the following data in its December 31 annual report. Cash and cash equivalents $1,050,000 Negative cash flows from operations 420,000)a) What is the company's "cash burn" per month? b) What is the company's ratio of cash to monthly cash expenses? c) Interpret the ratio you computed in part 2. What are the implications for Farm Store, Inc.?

A bank reconciliation should be prepared

Assign the letter to indicate whether the following items would be added or subtracted from the company's books or the bank statement during the construction of a bank reconciliation. -deposit in transit

Match each item to a bank statement adjustment, a company books adjustment, or either. -Error in recording a check

Match each item to a bank statement adjustment, a company books adjustment, or either. -NSF check

Match each item to a bank statement adjustment, a company books adjustment, or either. -Interest revenue