1.- Acme, Inc.\'s books show an ending cash balance of $19,500 before preparing
ID: 2426560 • Letter: 1
Question
1.- Acme, Inc.'s books show an ending cash balance of $19,500 before preparing the bank reconciliation. Given the bank reconciliation shows outstanding checks of $4,900, deposits in transit of $3,900, NSF check of $290, and interest earned on the bank account of $200, the company's up-to-date ending cash balance equals:
A) $19,410.
B) $14,510.
C) $18,410.
D) $19,990.
2.- If a cashier rang up sales totaling $5,128, but had $5,180 to deposit, which journal entry would be recorded?
A) A debit to Cash for $5,180 a credit to Cash Overage for $52 and a credit to Sales Revenue for $5,128.
B) A debit to Sales for $5,180 a debit to Cash Overage for $52 and a credit to Cash for $5,128
C) A debit to Cash for $5,128 a debit to Cash Shortage for $52 and a credit to Sales Revenue for $5,180.
D) A debit to Cash for $5,128 a debit to Cash Shortage for $52 and a credit to Unearned Revenue for $5,180.
Explanation / Answer
1. BANK RECONCILIATION STATEMENT
As per books $ 19500
- NSF Check $ (290)
+ Interest from Bank $ 200
the company's up-to-date ending cash balance = 19500 - 290 + 200 = $ 19410
As the bank reconciliation of outstanding cheques and deposit in transit is deducted and added respectively in the balance from bank book.
2. The option A is correct as the Sales were rang up to $ 5128 but cashier had $ 5180 i.e. $ 52 excess amount to be deposited
Therefore the entry would be
CASH A/C DR. $ 5180
TO SALES REVENUE A/C $ 5128
TO CASH OVERAGE A/C $ 52
As there is no shortage in the cash therefore options c and d are eleminated
and the option b entry would totally be wrong as the both end would not tally (sales debit and cash overage debit given in option b i.e. 5180+52 = 5232 but on credit side it is only 5128 which is wrong)
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