Cash
Hard Practice Test
Financial Accounting
Cash
Hard Practice Test
Click the “Check Your Answer” box below each problem to reveal the correct answer and explanation.
1. The following information is related to the company’s bank reconciliation on January 31st:
| Adjusted cash account balance 1/1 | 10,490 |
| Bank collected on a note receivable, including $19 interest | 200 |
| Deposits not posted by the bank on 1/31 | 899 |
| Checks not cleared by the bank on 1/31 | 1,400 |
| NSF Checks | 422 |
| Deposits posted by the bank during January | 2,200 |
| Total checks written in January | 21,905 |
| Total deposits made in January | 22,705 |
A. Prepare the bank reconciliation for the company for the month of January.
B. Determine the ending balance on the January 31st bank statement.
C. Prepare the journal entries required to adjust the cash account.
Check Your Answer
| Cash | Bank | ||
| Ending Balance 1/31 | $11,290 | $ ?? 11,569 | |
| Auto collection | $181 | ||
| Auto collection | $19 | ||
| Deposits in transit | $899 | ||
| Outstanding checks | ($1,400) | ||
| NSF Checks | ($422) | ||
| Adjusted 1/31 balance | $11,068 | must = | $ ?? 11,068 |
Beginning Cash balance $10,490
+ Deposits 22,705
– Check written (21,905)
Ending Cash balance $11,290
B. The adjusted bank balance must equal the adjusted cash balance of $11,068.
Work backwards to determine that the beginning balance must be $11,569.
C. Record items in the cash column only.
Accounts Receivable 422
Cash 222
Notes Receivable 181
Interest Income 19
2. Use the following information to prepare the bank reconciliation for the month of March:
Unadjusted cash balance on 2/28 is $14,679
Recorded in the cash account during March:
Deposits made $11,967
Checks written $ 9,054
| Checks cleared by bank during March | $7,290 |
| Deposits posted by bank during March | $9,908 |
| Outstanding checks on 2/28 | $1,290 |
| Deposits in Transit on 2/28 | $2,210 |
The bank recorded a deposit of $1,200 for the amount of $2,100
Bank service charges were $120 and interest earned on the account is $200
Check Your Answer
First, determine the ending cash balance on 3/31
Cash balance 2/28 $14,679
+ Deposits 11,967
– Check written (9,054)
Cash balance 3/31 $17,592
Determine deposits in transit and outstanding checks
| Deposits | Checks | ||
| Outstanding/not posted 2/28 | 2,210 | 1,290 | |
| + made/written | 11,967 | 9,054 | |
| – posted/cleared | (9,908) | (7,290) | |
| Ending In Transit/Outstanding | 4,269 | 3,054 | |
| Cash | Bank | ||
| Ending Balance 3/31 | $17,592 | $17,357 not given, work up | |
| Service Charge | (120) | ||
| Interest Earned | 200 | ||
| Bank error | (900) | ||
| Deposits in transit | $4,269 | ||
| Outstanding Checks | ($3,054) | ||
| Adjusted 1/31 balance | $17,672 | = | $17,672 |
3. Use the following information to prepare a bank statement and make the entry to cash to get the correct cash balance on June 30th.
Balances on 6/30:
Cash G/L account $11,027 unadjusted
Bank statement ??
A deposit made by the company for $1,398 was entered by the bank as $1,938
A check written for $1,325 was cleared by the bank for $1,235
The bank charged the company processing fees of $100
Interest earned on the account was $169. The company had previously estimated and recorded $150 in the cash account for interest.
The bank collected a note and interest for the company in the amount of $1,000 for the note and $115 interest.
Automatic payments to suppliers were made for $2,967
Deposits not posted by the bank totaled $2,200
Checks not cleared by the bank totaled $3,900
Check Your Answer
| Cash | Bank | ||
| Ending Balance 6/30 | $11,027 | $11,424 ?? Must be |
|
| Auto Collection | $1,000 | ||
| Auto Collection | $115 | ||
| Deposits in transit | $2,200 | ||
| Outstanding Checks | ($3,900) | ||
| Error – bank – deposit | ($540) | ||
| Error – bank – check | ($90) | ||
| Service Fees | ($100) | ||
| Correct interest | $19 | ||
| Auto Payment | ($2,967) | ||
| Adjusted 6/30 balance | $9,094 | = | $9,904 |
The two columns have to equal so the adjusted bank balance on 6/30 must also be $9,094. Work up to compute the bank statement balance on 6/30.
Record only items in the cash column.
Debit/credit cash for the difference in the ending and the adjusted cash column.
A decrease is a credit.
Service Fees 100
Accounts Payable 2,967
Interest Revenue 19
Note Receivable 1,000
Interest Revenue 115
Cash 1,933
Positive numbers are credits
Negative numbers are debits