Print Item Mastery Problem: Internal Control and Cash Murdstone, Inc., You’ve just been hired as an accountant at Murdstone, Inc., a retailer of supplies for arts and crafts. Since the previous accountant left his position suddenly, the controller of Murdstone, Inc. has asked for your assistance in filling in some missing data for the company’s January accounting records. You’ll also be responsible for training the company’s new accounting intern. Cash Short and Over The controller has completed the T accounts for the cash and sales accounts as of January 30, but needs to attend an important conference in another city. She has requested that you prepare the T account for the cash short and over account as of January 30 also. You are told that the balance of the account is zero as of the beginning of January, and that all the company’s sales are in cash. To simplify, this problem assumes that a company has only one bank account, which is identified in the Ledger as “Cash.” Review the following T accounts, and then scroll down to complete the cash short and over T account and answer the associated question that follows it. Cash Balance 1/1 5,500 1/2 Establish Petty Cash 500 1/5 2,850 1/12 6,255 1/23 3,270 1/30 4,450 Balance 21,825 Sales Balance 1/1 0 1/5 2,855 1/12 6,225 1/23 3,330 1/30 4,400 Balance 16,810 Review the preceding T accounts, and then complete the cash short and over T account and associated question that follows it.
-
Print Item
Mastery Problem: Internal Control and Cash
Murdstone, Inc.,
You’ve just been hired as an accountant at Murdstone, Inc., a retailer of supplies for arts and crafts. Since the previous accountant left his position suddenly, the controller of Murdstone, Inc. has asked for your assistance in filling in some missing data for the company’s January accounting records. You’ll also be responsible for training the company’s new accounting intern.
Cash Short and Over
The controller has completed the T accounts for the cash and sales accounts as of January 30, but needs to attend an important conference in another city. She has requested that you prepare the T account for the cash short and over account as of January 30 also. You are told that the balance of the account is zero as of the beginning of January, and that all the company’s sales are in cash. To simplify, this problem assumes that a company has only one bank account, which is identified in the Ledger as “Cash.”
Review the following T accounts, and then scroll down to complete the cash short and over T account and answer the associated question that follows it.
Cash Balance 1/1 5,500 1/2 Establish Petty Cash 500 1/5 2,850 1/12 6,255 1/23 3,270 1/30 4,450 Balance 21,825
Sales Balance 1/1 0 1/5 2,855 1/12 6,225 1/23 3,330 1/30 4,400 Balance 16,810
Review the preceding T accounts, and then complete the cash short and over T account and associated question that follows it.
Cash Short and Over Balance 1/1 0 fill in the blank 8ef87101d05403e_2 fill in the blank 8ef87101d05403e_4 fill in the blank 8ef87101d05403e_6 fill in the blank 8ef87101d05403e_8 Balance fill in the blank 8ef87101d05403e_9
What will happen to the ending balance in the cash short and over account at the end of the accounting period?
Petty Cash
Murdstone, Inc. issued a check on January 2 to establish a petty cash fund of $500. On January 31, the amount of cash in the petty cash fund is $440. The company would like to issue a check to replenish the fund, based on the following summary of petty cash receipts:
Account Amount on
ReceiptOffice Supplies $30 Miscellaneous Administrative Expense 23
The company’s policy is to record any missing funds in the cash short and over account.
The new intern has prepared a proposed
journal entry to record the replenishing of the petty cash fund:Date Description Debit Credit Jan. 31 Petty Cash 53 Cash 53 Prepare for your discussion with the intern by journalizing the correct entry for the replenishment of the petty cash fund. If an amount box does not require an entry, leave it blank.
Jan. 31 - Select - - Select - - Select - - Select - - Select - - Select - - Select - - Select - Bank Reconciliation
The company’s accounting intern has prepared the end-of-January bank reconciliation from the bank statement, and is worried because the adjusted balance amounts do not agree. After reviewing the bank reconciliation, scroll down for the next steps in helping the intern.
Murdstone, Inc.
Bank Reconciliation
January 31, 20Y5Cash balance according to bank statement $23,557.98 Adjustments: Add: Deposit in transit on January 31 12,125.25 Deduct: Outstanding Check No. 124 $(62.00) Outstanding Check No. 125 (57.00) Outstanding Check No. 129 (1,250.00) Total deductions (1,369.00) Adjusted balance $34,314.23 Cash balance according to Murdstone, Inc. $51,545.88 Adjustments: Add: Note and interest collected by bank 15,250.75 Deduct: Check returned because of insufficient funds $(23,475.40) Bank service charge (250.00) Error in recording Check No. 123 (9,000.00) Total deductions (32,725.40) Adjusted balance $34,071.23 You assist the intern to check source documents, and find that most of the dollar amounts are correct; however, two dollar amounts are incorrect. After reviewing the following table, scroll down for the next steps in helping the intern.
Item Correct in
Intern's Reconciliation?If "No,"
Corrected AmountCash balance according to bank statement Yes Deposit in transit on January 31 Yes Outstanding Check No. 124 Yes Outstanding Check No. 125 No $75.00 Outstanding Check No. 129 Yes Cash balance according to Murdstone, Inc. Yes Check returned because of insufficient funds Yes Note and interest collected by bank Yes Bank service charge No $25.00 Murdstone error in recording Check No. 123 as $12,435.00 rather than the correct amount of $21,435.00 Yes
After asking the intern to search for other errors by comparing her reconciliation to prior bank reconciliations prepared by the former accountant, you work together to compute the corrected adjusted balance. Round your answer to two decimal places.
Corrected adjusted balance amount: $fill in the blank fdde62f12f89053_1
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
