CHAPTER 7 Internal Control and Cash Problem 7-3A Petty cash fund reimbursement and analysis of errors L04 Capital Irrigation has only a general journal in its accounting system and uses it to record all trans. actions. However, the company recently set up a petty cash fund to facilitate payments of small items. The following petty cash transactions were noted by the petty cashier as occurring during April 2017: Apr. 1 Received a company cheque for $300 to establish the petty cash fund. 15 Received a company cheque to replenish the fund for the following expenditures made since April 1 and to increase the fund to $400. a. Paid $82 for janitorial service. b. Purchased office supplies for $78.15. c. Purchased postage stamps for $25.00. d. Paid $92.50 to The County Crier for an advertisement in the newspaper. e. Discovered that $24.35 remained in the petty cash box. 30 The petty cashier noted that $244.95 remained in the fund and decided that the April 15 increase in the fund was too large. Therefore, a company cheque was issued to replenish the fund for the following expenditures made since April 15 and to reduce the fund to $350. f. Purchased office supplies for $94.65. 9. Reimbursed office manager for business auto, $45.60. h. Paid $14.80 courier charges to deliver merchandise to a customer. Required Prepare journal entries to record the establishment of the fund on April 1 and its replenish ments on April 15 and April 30. Analysis Component: Explain how the company's financial statements would be affected if the petty cash fund were not replenished and no entry were made on April 30. (Hint: The amount of office supplies that appears on a balance sheet is determined by a physical count of the supplies on hand.) Problem 7-10A Preparation of a bank reconciliation and recording adjustmer CHECK FIGURE: 1. Adjusted book balance = $28,250 The following is information for Dundee Realty: a. Balance per the bank statement dated October 31, 2017, is $26,830. b. Balance of the Cash account on the companii hooks as of October 31, 2017, 15 0,0 e. $14,680 of customer deposits were outstanding as of September 30, this amount had been deposited to Dundee's account in October d. Cheques written in October that had not cleared the bank as of October 31 were: #8700, $985 #8709, $12,600 #8801, $620 #8815, $145. e. The bank charged Dundee's account for a $2,350 cheque of the E-Zone Networks; the cheque was found among the cancelled cheques returned with the bank statement. f. Bank service charges for October amount to $65. g. A customer's cheque (Teresa Krant) for $7,050 had been deposited in the bank correctly but was recorded in the accounting records as $7,500. h. Among the cancelled cheques is one for $260 given in payment of an account payable to Decker Company; the bookkeeper had recorded the cheque incorrectly at $620 in the company records. i. The bank statement showed an electronic fund transfer of $22,880 for a customer payment. A bank service fee of $50 was charged. j. A bank deposit of October 31 for $13,420 does not appear on the bank statement. Required 1. Prepare a bank reconciliation statement as of October 31, 2017. 2. Prepare the necessary entries to make the Cash account agree with the bank reconciliation ad- justed Cash balance as of October 31. Analysis Component: Identify the effects on the income statement and balance sheet if the entries in Part 2 were not recorded