Bill Howe is reviewing the cash accounting for Kappeler,inc. a local mailing ser
ID: 2444742 • Letter: B
Question
Bill Howe is reviewing the cash accounting for Kappeler,inc. a local mailing service. Howe's review will focuson the petty cash account and the bank reconcilation for themokknth ending May 31, 2007. He has collected teh followinginformation from Kappeler's bookkeeper for this task. Petty cash: 1. Teh petty cash fund was established on May 10, 2007, in theamount of $250. 2. Expenditures from the fund by teh custodian as of May 31,2007 were evidenced by approved receipts for the following: Postageexpense 33.00 mailing labels and othersupplies 75.00 I.O.U. fromemployees 30.00 shippingcharges 57.45 newspaperadvertising 22.80 miscexpense 15.35 On may 31, 2007, the petty cash fund was replenished andincreased to $300; currency and coin in the fund at that timetotaled $16.40. Bank reconciliation: Disbursements Receipts Balance Balance, May2007 8,769 Deposits 28,000 Note payment direct from customer (interest of$30) 930 Checks cleared duringMay 31,150 bank servicecharges 27 balance, May31,2007 6,522 Kappeler's Cash Account Balance May,2007 9,150 Depositsduring May2007 31,000 Checks written during May2007 (31,835) Deposits in transit are determined to be $3000, and checksoutstanding at May 31 total $550. Cash on hand (besides pettycash) at May 31, 2007 is $246. Instructions: a) Prepare teh journal entries to record teh transactionsrelated to the petty cash fund for May. b) Prepare a bank reconciliation dated May 31, 2007,proceeding to a correct cash balance, and prepare thejournal entries necessary to make the books correct andcomplete. c) What amount of cash should be reported in teh May 31, 2007,balance sheet? Bill Howe is reviewing the cash accounting for Kappeler,inc. a local mailing service. Howe's review will focuson the petty cash account and the bank reconcilation for themokknth ending May 31, 2007. He has collected teh followinginformation from Kappeler's bookkeeper for this task. Petty cash: 1. Teh petty cash fund was established on May 10, 2007, in theamount of $250. 2. Expenditures from the fund by teh custodian as of May 31,2007 were evidenced by approved receipts for the following: Postageexpense 33.00 mailing labels and othersupplies 75.00 I.O.U. fromemployees 30.00 shippingcharges 57.45 newspaperadvertising 22.80 miscexpense 15.35 On may 31, 2007, the petty cash fund was replenished andincreased to $300; currency and coin in the fund at that timetotaled $16.40. Bank reconciliation: Disbursements Receipts Balance Balance, May2007 8,769 Deposits 28,000 Note payment direct from customer (interest of$30) 930 Checks cleared duringMay 31,150 bank servicecharges 27 balance, May31,2007 6,522 Kappeler's Cash Account Balance May,2007 9,150 Depositsduring May2007 31,000 Checks written during May2007 (31,835) Deposits in transit are determined to be $3000, and checksoutstanding at May 31 total $550. Cash on hand (besides pettycash) at May 31, 2007 is $246. Instructions: a) Prepare teh journal entries to record teh transactionsrelated to the petty cash fund for May. b) Prepare a bank reconciliation dated May 31, 2007,proceeding to a correct cash balance, and prepare thejournal entries necessary to make the books correct andcomplete. c) What amount of cash should be reported in teh May 31, 2007,balance sheet?Explanation / Answer
a.
journal entries
1
300.00
300.00
2
33.00
75.00
30.00
57.45
22.80
15.35
50.00
283.60
3
283.60
283.60
b.
Bank Reconciliation
31 may,2007
$6,522
$3,000
$550
$8,972
$8,315
$930
$27
$9,218
$246
$8,972
c.
Balance Sheet
31-May-07
a.
journal entries
1
Petty cash300.00
Cash300.00
( Transfer the fund to petty cash)2
Postage expense33.00
mailing labels75.00
I.O.U.from employees30.00
shipping charges57.45
Newspaper advertising22.80
Miscellaneous exp.15.35
Cash over and short50.00
petty cash283.60
( replenish the fund)3
Petty cash283.60
Cash283.60
(reimbursement of exp. by increasing the bal. of petty cash for next period)b.
THIRD NATIONAL BANKBank Reconciliation
31 may,2007
Balance as per bank statement$6,522
Add: Deosit in transit$3,000
Less: Outstanding checks$550
Correct Cashbalance$8,972
Balance as per books (9150+$31000-31835)$8,315
Add: Notes collected with Interest$930
Less: Bank service charges$27
$9,218
Less; Cash on hand$246
Correct cashbalance$8,972
c.
Balance Sheet
31-May-07
Current Assets Cash on hand $246 Cash at Bank $8,972 total cash bal. $9,218Related Questions
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