Work Sheet: SAMARA University College of Business and Economics Department of Accounting and Finance

SAMARA University
College of Business and Economics

Department of Accounting and finance
Work sheet
1. Define cash as it is used for accounting purposes
2. Why is a petty cash fund replenished at the end of a reporting period?
3. Briefly explain the basic purpose of a bank reconciliation
4. Define the following terms related to accounting for cash:
(a) Deposit in transit
(b) Checks outstanding
(c) NSF check
(d) Correct cash balance
(e) Cash short and over
5. Main Company decided to use a petty cash system for making small payments. The
following transactions were completed during December 2007:
a. On December 1, 2007 the Company treasurer prepared a Birr 800 check payable to
petty cash; the cash was given to the custodian.
b. Expenditures by the custodian (and signed receipts received) through December 20
were postage, birr 160; office supplies, Birr 140; newspapers, Birr 72; office
equipment repairs, Birr 240; coffee room supplies, Birr 60; and miscellaneous items,
Birr 48.
c. On December 20 the treasurer fully replenished the fund.
d. Expenditures by the custodian through December 31 were postage, Birr 52; office
supplies, birr 72; newspapers, Birr 28; office equipment repairs, Birr 84; Coffee
room supplies, Birr 40; and miscellaneous items, Birr 24. The fund was replenished
on December 31.
Required: 1. Give all journal entries that should be made relating to the petty cash fund through
December 31, 2007 (end of the annual accounting period), assuming that the petty cash
expenditures were for administrative expenses.
2. Show how the petty cash fund should be reported on the balance sheet.
6. The payee of a 100-day, 12% note for Birr 5000, dated September 2, endorses it to a bank on
November 1. The bank discounts the note at 14%.
Required: Identify or determine the following as they relate to the note: (a) face value, (b)
maturity value, (c) due date, (d) number of days in the discount period, (e) proceed amount
received by the endorser, (f) interest income or expense recorded by the endorser, (g) amount
payable to the bank if the maker should default, (h) pass the entry to record the discounting
of the note by the endorser.
7. The cash in bank account for DX Co. on May 31 of the current year indicated a balance of
$13,215.80 after both the cash receipts journal and the check register for May had been
posted. The bank statement indicated a balance of $19,513.90 on May 31. Comparison of the
bank statement and the accompanying cancelled checks and memorandums with the records
revealed the following reconciling items.
A. Checks outstanding totaled $7,070.10.

B. A deposit of $3,915.20, representing receipts of May 31, had been made too late to
appear on the bank statement.
C. The bank had collected $3,120 on an interest bearing note left for collection. The face of
the note was $3,000.
D. A check for $69 returned with the statement had been recorded erroneously in the check
register as $96. The check was for payment of an obligation to YX Co. for the purchase
of supplies on account.
E. A check drawn for $42 had been erroneously charged by the bank as $24.
F. Bank service charges for May amounted to $21.80.
Instructions:
i. Prepare bank reconciliation.

ii. Record the necessary entries in general journal form.
iii. What is the amount of cash in bank that should appear on the balance sheet as of
May 31?
8. The following information was obtained from TG Co. recorded at the end of the accounting
period (June 30, 2000).
Merchandise inventory June 30, 2000………………….…………………………………$20,000
Purchase…………………………………………………….…………………450,000
Purchase return and allowance…………………………………………….……….7, 000
Purchase discount……………..…. (2% of cost of goods purchased during the period)
Sales……………………………………………………………..…………………585,000
Gross profit………………………………………………………………………150,000
Freight-in………………………………………………………………………..6,820
Freight-out……………………………………………………..………………….5, 000
Salary expense………………………………………………………………….10, 250
Supplies expense…………………………………………………………..………2,500
Rent expense……………………………………………………………………….5, 500
Miscellaneous expense…………………………………………………………...1,750
Assuming that there is no sales discount and sales return and allowance during the period.
Instruction: Calculate
A. Merchandise inventory on July 1, 1999.
B. Purchase discount.
C. Cost of goods sold
D. Operating income
E. Cost of goods purchased

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SAMARA University

College of Business and Economics

A. Checks outstanding totaled $7,070.10.

i. Prepare bank reconciliation.

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