Topic (4)

Question (1) On October 1, 2022, Ellis Company establishes an imprest petty cash fund by issuing a check for
$1500 to Pat Harmon, the custodian of the petty cash fund. On October 31, 2022, Pat Harmon submitted the
following paid petty cash receipts for replenishment of the petty cash fund when there is $120 cash in the fund:
Freight-In $ 250 Supplies Expense 320
Entertainment of Clients 550 Postage Expense 240
Instructions: Prepare the journal entries required to establish the petty cash fund on October 1 and the
replenishment of the fund on October 31.
Date Accounts & Explanation Debit Credit
October 1 Petty cash 1500
Cash 1500

October 31 Freight-In 250

Supplies Expense 320
Entertainment of Clients 550
Postage Expense 240
Cash over and short 20
Cash 1380

Question (2) Bell Food Store developed the following information in recording its bank statement for the month
of March.
▪ Balance per bank statement March 31 $ 5,300 ▪ Balance per books March 31 $ 4,705
▪ NSF check 1,070 ▪ Bank service charge 35
▪ Deposit in transit 750 ▪ Outstanding checks 1,450
▪ Collected of a note receivable 1,000
Instructions: 1- Prepare a bank reconciliation on March 31. 2- Prepare the necessary adjusting entries
1- The bank reconciliation at March 31.
Balance per bank statement March 31 $ 5,300 Balance per books March 31 $ 4,705
+ Deposit in transit 750 – NSF check (1,070)
– Outstanding checks (1,450) + Collected of a note receivable 1,000
– Bank service charge (35)

Adjusted balance per book 4,600 Adjusted balance per book 4,600
2- The journal entries
Accounts Dr Cr Accounts Dr Cr
Cash 1000 Accounts Receivable 1070
Notes receivable 1000 Bank service charge 35
Cash 1105

The cash account shows a balance of $42,000 before reconciliation. The bank statement does not B
include a deposit of $9,000 made on the last day of the month. The bank statement shows a collection
by the bank of $4,000 and a customer’s check for $2,000 was returned because it was NSF. A
customer’s check for $1,300 was recorded on the books as $1,800, and a check written for $3300 was
recorded as $2300. The correct balance in the cash account is:
A. $33,500. B. $42,500. C. $44,500. D.$43,500.

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= 42,000 + 4,000 – 2000 – 500 – 1000 = 42,500

(1)