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5. The bank statement balance of $7,000 does not include a check outstand- ing of $1,000, a deposit in transit of $275, and another company's $250 check erroneously charged against your firm's account. The reconciled bank balance is: a. $6,375 b. $6,580 c. $6,525 d. $6,570

5. The bank statement balance of $7,000 does not include a check outstand- ing of $1,000, a deposit in transit of $275, and another company's $250 check erroneously charged against your firm's account. The reconciled bank balance is: a. $6,375 b. $6,580 c. $6,525 d. $6,570

Auditing: A Risk Based-Approach (MindTap Course List)
Auditing: A Risk Based-Approach (MindTap Course List)
11th Edition
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Chapter9: Auditing The Revenue Cycle.
Section: Chapter Questions
Problem 30RQSC
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5. The bank statement balance of $7,000 does not include a check outstand- ing of $1,000, a deposit in transit of $275, and another company's $250 check erroneously charged against your firm's account. The reconciled bank balance is: a. $6,375 b. $6,580 c. $6,525 d. $6,570 Use the following information to answer questions 6-8. You are doing a bank reconciliation for May, 20X1. You have a $2,785 unadjusted ledger cash bal- ance and the following data: • Outstanding checks: No. 719, $200; No. 727, $800; No. 732, $625 Deposits in transit, $1,200 • Check No. 742 (for repairs) written for $505 but incorrectly recorded as $550 • NSF check from a customer, $500 • Bank service charge for May, $5 • Balance per bank statement, $2,750 6. What dollar amount should be deducted from the balance per bank statement? a. $1,425 b. $1,625 c. $505 d. $2,125 7. What dollar amount should be deducted from the balance per books? a. $460 c. $550 d. $1,625 8. Which adjustment will you need to make to company books? a. a net decrease in Cash of $550 b. a net decrease in Cash of $505 c. a net decrease in Cash of $460 d. a net increase in Cash of $45 b. $505
Transcribed Image Text:5. The bank statement balance of $7,000 does not include a check outstand- ing of $1,000, a deposit in transit of $275, and another company's $250 check erroneously charged against your firm's account. The reconciled bank balance is: a. $6,375 b. $6,580 c. $6,525 d. $6,570 Use the following information to answer questions 6-8. You are doing a bank reconciliation for May, 20X1. You have a $2,785 unadjusted ledger cash bal- ance and the following data: • Outstanding checks: No. 719, $200; No. 727, $800; No. 732, $625 Deposits in transit, $1,200 • Check No. 742 (for repairs) written for $505 but incorrectly recorded as $550 • NSF check from a customer, $500 • Bank service charge for May, $5 • Balance per bank statement, $2,750 6. What dollar amount should be deducted from the balance per bank statement? a. $1,425 b. $1,625 c. $505 d. $2,125 7. What dollar amount should be deducted from the balance per books? a. $460 c. $550 d. $1,625 8. Which adjustment will you need to make to company books? a. a net decrease in Cash of $550 b. a net decrease in Cash of $505 c. a net decrease in Cash of $460 d. a net increase in Cash of $45 b. $505
1. While reviewing a trial balance, you notice the following account balances. Which one is likely to be an error? a. Inventory with a debit balance of $43,000 b. Discount on Bonds Payable with a debit balance of $4,000 c. Accumulated Depreciation with a debit balance of $8,000 d. Allowance for Doubtful Accounts with a credit balance of $23,000 2. Debiting an insurance payment to Rent Expense instead of Insurance Expense is an example of... a. an accrual error b. a deferral error c. a classification error d. use of an incorrect accounting principle 3. InCo. recorded a customer's $20,000 check as a $20,000 debit to Cash and as a $2,000 credit to Accounts Receivable. This is an example of: a. an oversight b. an incorrect account classification c. a transposition error d. a slide error 4. During a bank reconciliation, a deposit recorded by the bank but not in the company's ledger Cash account is... a. added to both the bank balance and the ledger Cash account balance b. added to the ledger Cash account balance only c. added to the bank balance only d. subtracted from the bank balance and added to the ledger Cash account balance
Transcribed Image Text:1. While reviewing a trial balance, you notice the following account balances. Which one is likely to be an error? a. Inventory with a debit balance of $43,000 b. Discount on Bonds Payable with a debit balance of $4,000 c. Accumulated Depreciation with a debit balance of $8,000 d. Allowance for Doubtful Accounts with a credit balance of $23,000 2. Debiting an insurance payment to Rent Expense instead of Insurance Expense is an example of... a. an accrual error b. a deferral error c. a classification error d. use of an incorrect accounting principle 3. InCo. recorded a customer's $20,000 check as a $20,000 debit to Cash and as a $2,000 credit to Accounts Receivable. This is an example of: a. an oversight b. an incorrect account classification c. a transposition error d. a slide error 4. During a bank reconciliation, a deposit recorded by the bank but not in the company's ledger Cash account is... a. added to both the bank balance and the ledger Cash account balance b. added to the ledger Cash account balance only c. added to the bank balance only d. subtracted from the bank balance and added to the ledger Cash account balance
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1. While reviewing a trial balance, you notice the following account balances. Which one is likely to be an error? a. Inventory with a debit balance of $43,000 b. Discount on Bonds Payable with a debit balance of $4,000 c. Accumulated Depreciation with a debit balance of $8,000 d. Allowance for Doubtful Accounts with a credit balance of $23,000 2. Debiting an insurance payment to Rent Expense instead of Insurance Expense is an example of... a. an accrual error b. a deferral error c. a classification error d. use of an incorrect accounting principle 3. InCo. recorded a customer's $20,000 check as a $20,000 debit to Cash and as a $2,000 credit to Accounts Receivable. This is an example of: a. an oversight b. an incorrect account classification c. a transposition error d. a slide error 4. During a bank reconciliation, a deposit recorded by the bank but not in the company's ledger Cash account is... a. added to both the bank balance and the ledger Cash account balance b. added to the ledger Cash account balance only c. added to the bank balance only d. subtracted from the bank balance and added to the ledger Cash account balance
Transcribed Image Text:1. While reviewing a trial balance, you notice the following account balances. Which one is likely to be an error? a. Inventory with a debit balance of $43,000 b. Discount on Bonds Payable with a debit balance of $4,000 c. Accumulated Depreciation with a debit balance of $8,000 d. Allowance for Doubtful Accounts with a credit balance of $23,000 2. Debiting an insurance payment to Rent Expense instead of Insurance Expense is an example of... a. an accrual error b. a deferral error c. a classification error d. use of an incorrect accounting principle 3. InCo. recorded a customer's $20,000 check as a $20,000 debit to Cash and as a $2,000 credit to Accounts Receivable. This is an example of: a. an oversight b. an incorrect account classification c. a transposition error d. a slide error 4. During a bank reconciliation, a deposit recorded by the bank but not in the company's ledger Cash account is... a. added to both the bank balance and the ledger Cash account balance b. added to the ledger Cash account balance only c. added to the bank balance only d. subtracted from the bank balance and added to the ledger Cash account balance
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