E5-13

Recording money sales; money over

The actual money received from money sales was $14,356, and therefore the quantity
indicated by the register total was $14,290.
a. what's the number deposited within the bank for the day's sales?
- the particular quantity deposited within the bank was $14,356.

b. what's quantity recorded for the day's sales?

- the number recorded was $14,290.

c. however ought to the distinction be recorded?

- The distinction is recorded with the subsequent journal entry

Debit money
Credit Over/Short
Credit Sales

- $14,356
- $66.00
- $14,290

d. If a cashier is systematically over or short, what actions ought to be taken?

- If the cashier is systematically beneath, then one would possibly question whether or not
the cashier is pocketing the money. If the cashier is systematically over, then one would
possibly ponder whether the moneyier is cheating the shoppers within the mistaken belief
that management appreciates the additional cash. In either cases, management ought to
counsel the worker once. If this continues to happen, then worker should be unemployed.

E5-18
Bank reconciliation
Adjusted balance: $24,500

The following knowledge were accumulated to be used in adaptative the checking account
of Camela Co. for July:
a. money balance per the company's records at July thirty one, $24,010.
b. money balance per the statement at July thirty one, $22,750.

c. Checks outstanding, $7,350.

- once subtracting this worth from the statement. We get $15,400

d. Deposit in transit, not recorded by bank, $9,100.

- once adding this worth to the statement. We get $24,500

e. A check for $170 in payment of associate account was mistakenly recorded within the
registry as $710.
- Since $170 was recorded as $710, we tend to currently ought to add $540 to the corporate
money Records
i.e. $ 24,550

f. Bank debit note for service charges, $50.

- Subtracting this debit note worth from Company money Records. we tend to get $ twenty
four,500

Prepare bank reconciliation, using the format shown in Exhibit 6.

Camela Co.
Bank Reconciliation
July 31

Cash balance according to the bank statement........

$22,750

Deposit in transit, not recorded by bank.

9,100
$31,850

Checks outstanding.
Adjusted Balance

7,350
$24,500

Cash balance according to the company's records.

$24,010

Add note and interest collected by bank

540

Bank debit memo for service charges

50

Adjusted Balance

$24,500

Describe the nature of a bank account and its use in controlling cash.
A major reason that companies use bank accounts is for internal control. Some of the control
advantages of using bank accounts are as follows:

1. Bank accounts reduce the amount of cash in hand.

2. Bank accounts provide an independent recording of cash transactions. Recording the
balance of the cash account in the companys records with the cash balance according to the
bank is an important control.
3. Use of bank accounts facilitates the transfer of funds using EFT systems.

Bank Statement: Banks usually maintain a record of all checking account transactions. A summary of all
transactions, called a bank statement, is mailed, usually each month, to the company (depositor) or made
available online. The bank statement shows the beginning balance, additions, deductions, and the ending
balance. A typical bank statement is shown in Exhibit 4.

EXHIBIT 6 Bank Reconciliation for Colter Inc.

The company's records do not need to be updated for any items in the bank section of the reconciliation.
This section begins with the cash balance according to the bank statement. However, the bank should be
notified of any errors that need to be corrected.
The company's records do need to be updated for any items in the company section of the bank
reconciliation. For example, entries should be made for any unrecorded bank memos and any company
errors.
The effects of the adjustments on the accounts and financial statements of Colter Inc. based on the bank
reconciliation in Exhibit 6, are as follows: