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 This amount was withdrawn from the checking account but not recorded.

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

  • CreatedJuly 15, 2014
  • Files Included
Post your question