Question

At the end of February, Howard Productions’ accounting records reveal a balance for cash equal to $19,225. However, the balance of cash in the bank at the end of February is only $735. Howard is concerned and asks the company’s accountant to reconcile the two balances. Examination of the bank statement and company records at the end of February reveals the following information:
NSF checks ......... $5,278
Service fees ......... $ 159
Deposits outstanding ....... 7,692
Checks outstanding ......... 489
In addition, during February the company’s accountant wrote a check to one of its suppliers for $150. The check was recorded correctly in the company’s records for $150 but processed incorrectly by the bank for $1,500. Howard has contacted the bank, which has agreed to fix the error. Finally, a petty cash fund of $4,500 was established during February. This amount was withdrawn from the checking account but not recorded.

Required:
1. Calculate the correct ending balance of cash at the end of February.
2. Discuss any problems you see with the company’s cashprocedures.


$1.99
Sales4
Views204
Comments0
  • CreatedJuly 15, 2014
  • Files Included
Post your question
5000