1- Hill Company established a petty cash fund of? $500. The first transaction wa
ID: 2402224 • Letter: 1
Question
1- Hill Company established a petty cash fund of? $500. The first transaction was the purchase of stamps for? $46. Which of the following statements is? CORRECT?
A.
The amount of cash on hand and the cash voucher should be maintained in a cash box or other secure device.
B.
The amount of cash on hand should equal? $454.
C.
The petty cash custodian prepares a petty cash voucher to list the item purchased.
D.
All of the statements are correct.
2-In a bank? reconciliation, a NSF check? is:
A.
added to the bank balance.
B.
added to the book balance.
C.
subtracted from the book balance.
D.
subtracted from the bank balance.
3-The following accounts and balances are taken from Moore? Company's adjusted trial? balance:
Accounts Payable
?$12,000
Accounts Receivable
2900
Accumulated Depreciation
1500
Depreciation Expense
1100
Dividends
2400
Insurance Expense
2600
Interest Revenue
1140
Prepaid Insurance
2020
Retained Earnings
?10,600
Salary Expense
?22,100
Service Revenue
?37,800
What is the ending balance in Retained Earnings after the closing entries are? completed?
A.
?$10,740
B.
?$21,340
C.
?$38,940
D.
?$13,140
Accounts Payable
?$12,000
Accounts Receivable
2900
Accumulated Depreciation
1500
Depreciation Expense
1100
Dividends
2400
Insurance Expense
2600
Interest Revenue
1140
Prepaid Insurance
2020
Retained Earnings
?10,600
Salary Expense
?22,100
Service Revenue
?37,800
Explanation / Answer
1. Option D
Cash on hand = $500 - $46(purchase of stamps) =$454
A person is made responsible for all The petty cash disbursements and purchases using petty cash. He must prepare petty cash vouchers for the purchases. He is responsible for maintaining cash box or secure device
2. Option C
NSF checks are those not honored by bank. As those are bounced checks, they are subtracted from book balance during reconciliation to arrive at correct figure.
3. Option B
Net income = revenues - expenses
(1140+37800) - (1100+2600+22100)
=13140
Addition to retained earnings = Net income - dividends
= 13140-2400
=10740
Ending balance in Retained earnings = opening balance of retained earnings + additional during the year
=10600+10740
=21340
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