Alpha Company's bookkeeper decided to save time by accepting the ...

[newyorker26]

Alpha Company's bookkeeper decided to save time by accepting the cash balance shown on the bank statement as the company's correct ending cash balance each month. Explain to the bookkeeper why a monthly bank reconciliation should be prepared.
 
  What will be an ideal response?

Question 2

Cash Sales from the cash register tapes totaled 882 . There is a change fund of 100 . The cash count indicates that 984 is in the cash drawer. What journal entry would be required?
 a. debit Miscellaneous Expense for 2; credit Cash Short and Over for 2
   b. debit Cash for 982, Cash Short and Over for 2; credit Revenues for 984
   c. debit Cash Short and Over for 2; credit Miscellaneous Expense 2
   d. debit Cash for 884; credit Revenues for 882, and Cash Short and Over for 2

[Li Jun]

Answer to Question 1

The bank reconciliation is an important part of controlling cash. The amount in the church checkbook will not match the amount on the bank statement. This is because of timing differences. Items such as deposits that are mailed might not show up on the current bank statement. Outstanding checks will not have cleared the bank and will therefore not be deducted from the balance on the bank statement. Comparing the bank statement with the church records will also help to reveal any recording errors. The bookkeeper needs to record the amount of bank service charges on the bank statement. The bank may also be making collections on behalf of the church. In addition, the bank statement lists NSF checks. The amount of any NSF check must be subtracted from the church checking account records. Because these items have not been recorded, the balance in the church checking account is not accurate.

Answer to Question 2

d