Question

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 This amount was withdrawn from the checking account but not recorded.

Required:
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.



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  • CreatedJuly 15, 2014
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