Exam 8: Sarbanes-Oxley, Internal Control, and Cash

For strong internal control system over cash, it is important to have the duties related to cash receipts and cash payments divided among different employees.

Journalize the entries to record the following: Sept 1 Established a petty cash fund of $350 Sept 30 The amount of cash in the petty cash fund is now $130. The fund is replenished based on the following receipts: office supplies, $116; postage $100. Record any discrepancy in the cash short and over account. Journal

Cash equivalents are short -term investments that will be converted to cash within 120 days.

In preparing a bank reconciliation, the amount indicated by a credit memo for a note receivable collected by the bank is added to the balance per company's records.

The amount of the outstanding checks is included on the bank reconciliation as a(n)

The sum of the money on hand and petty cash receipts in a petty cash fund will always be equal to the balance in the Petty Cash account.

In the normal operation of business you receive a check from a customer and deposit it into your checking account. With your bank statement you are advised that this check for $775 is "NSF". The bank also informs you that due to the amount of activity on your business account the monthly service charge is $75. During a bank reconciliation, you will:

List and define each of the five elements of internal control.

On April 2nd, Granger Sales decides to establish a $125.00 Petty Cash Account to relieve the burden on Accounting. (a) Journalize this event. (b) On April 10th, the petty cash fund has receipts for mail and postage of $43.50, contributions and donations of $29.50, meals and entertainment of $38.25 and $13.55 in cash. Journalize the replenishment of the fund. (c) On April 11th, Granger Sales decides to increase petty cash to $200.00. Journalize this event.

A $150 petty cash fund has cash of $44 and receipts of $93. The journal entry to replenish the account would include a

For each of the following, explain whether the issue would require you to prepare a journal entry for your company, assuming any original entry is correct. If an entry is required, please include it as part of your answer. (1) The bank recorded your deposit as $91 rather than the actual amount of $191. (2) Two outstanding checks amounted to $450. (3) Company check number 538 for postage was recorded incorrectly by the company bookkeeper as $50 instead of $59. (4) The bank paid a check for $500 after the company had issued a stop payment and voided the check. (5) An EFT deposit was made by one of the company's customers, Atlas Design, for merchandise received. The sale had previously been recorded when shipped and was equal to the payment amount of $125.

The cash account for Santiago Co. on May 31, 2014 indicated a balance of $20,915. The March bank statement indicated an ending balance of $25,645. Comparing the bank statement, the canceled checks, and the accompanying memos with the records revealed the following reconciling items: Prepare a bank reconciliation as of May 31, 2014. Journalize the necessary entries. Santiago Co. Bank Reconciliation May 31, 2014 Journal

Entries are made to the Petty Cash account when

The control environment in an internal control structure is the attitude and awareness of internal control by all employees.

Accompanying the bank statement was a credit memo for a short-term note collected by the bank for the company. This item is a(n)

A voucher is usually supported by

A backlog in recording transactions is an example of a warning sign from the accounting system.

List the objectives of internal control and give an example of how each is implemented. Internal control provides reasonable assurance that

Bank reconciliation information for Cole Co. for May 31, 2011 is as follows: Record the appropriate journal entry for Cole Co.

The objectives of internal control are to