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# Cash

## Hard Practice Test

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.

 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:

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

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:
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

 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