Q 1. E710 -

Instructions:

For each transaction, indicate whether it would normally be recorded in a cash receipts journal, cash payments journal, sales journal, single-column purchases journal, or general journal.

Information:

Below are some typical transactions incurred by Ricketts Company.

Payment of creditors on account

Return of merchandise sold for credit

Collection on account from customers

Sale of land for cash

Sale of merchandise on account

Sale of merchandise for cash

Received credit for merchandise purchased on credit

Sales discount taken on goods sold

Payment of employee wages

Income summary closed to owners capital

Depreciation on building

Purchase of office supplies for cash

Purchase of merchandise on account.

A 1.

Q 2. DO IT! 72

Instructions:

Identify the journal in which each of the transactions above is recorded

Information:

Hinske Company had the following transactions during April.

Sold merchandise on account.

Purchased merchandise on account.

Collected cash from a sale to Renfro Company.

Recorded accrued interest on a note payable.

Paid $2,000 for supplies.

A 2.

Q 3. DO IT! 83

Instructions:

Prepare journal entries to establish a petty cash fund

Information:

Wilkinson Company established a $100 petty cash fund on August 1. On August 31, the fund had $7 cash remaining and petty cash receipts for postage $31, office supplies $42, and miscellaneous expense $16.

A 3.

Q 4. E82 -

Instructions:

For each procedure, explain the weakness in internal control, and identify the control principle that is violated. For each weakness, suggest a change in procedure that will result in good internal control

Information:

The following control procedures are used at Torres Company for over-the-counter cash receipts

To minimize the risk of robbery, cash in excess of $100 is stored in an unlocked attach case in the stock room until it is deposited in the bank.

All over-the-counter receipts are registered by three clerks who use a cash register with a single cash drawer.

The company accountant makes the bank deposit and then records the days receipts.

At the end of each day, the total receipts are counted by the cashier on duty and reconciled to the cash register total.

Cashiers are experienced; they are not bonded.

A 4.

Q 5. E811 -

Instructions:

Prepare a bank reconciliation at July 31 and journalize the adjusting entries at July 31 on the books of Crane Video Company.

Information:

The following information pertains to Crane Video Company.

Cash balance per bank, July 31, $7,263.

July bank service charge not recorded by the depositor $28.

Cash balance per books, July 31, $7,284.

Deposits in transit, July 31, $1,300.

Bank collected $700 note for Crane in July, plus interest $36, less fee $20. The collection has not been recorded by Crane, and no interest has been accrued.

Outstanding checks, July 31, $591.

A 5.