At the end of March, Weber Productions’ accounting records reveal a balance for cash equal to $21,861. However, the balance of cash in the bank at the end of February is only $4,576. Weber 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 March reveals the following information:
NSF checks .......... $ 6,783
Service fees .......... $195
Deposits outstanding ....... 7,348
Checks outstanding ....... 541
In addition, Weber owes one of its suppliers $200. During March, the company’s accountant mistakenly wrote the check for $1,200. The check was recorded in the company’s records for $200 but processed by the bank for $1,200. Weber has contacted the supplier who has agreed to send a $1,000 refund in April directly to the bank. Finally, a petty cash fund of $2,500 was established during March. This amount was withdrawn from the checking account but not recorded.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 cash procedures.

  • CreatedJuly 15, 2014
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