The accountant at Terry Farm Stores prepares a monthly bank reconciliation. On 31 August she received a bank statement from QBE Bank, which had a credit balance of $8 950. Terry Farm Stores' cash at bank account per the general ledger showed a debit balance of $15 050. A comparison of the bank statement with the cash payments and cash receipts journals revealed the following information: (1) Outstanding EFTs at 31 August totaled $1 550 (2) QBE bank mistakenly included a cheque payment on Terry Farm Stores' bank statement that related to Tolga Ltd. The cheque amount was for $2 180. The mistake will be corrected in September. (3) The bank statement included bank charges of $20. (4) In reviewing the cheque payments, a mistake was discovered on cheque no. 574 for the payment of rent expense. The amount of the cheque was for $5 510 but was recorded in the cash payments journal as $5 150. (5) Cash receipts recorded in the cash receipts journal on 30 August of $4 300 were not on the bank statement (6) The bank statement showed a reversal entry of $790 that was originally deposited by P. Macca, a customer, to Terry Farm Stores. Required (a) Prepare a bank reconciliation for Terry Farm Stores at 31 August. (b) Prepare the adjusting entries as at 31 August (c) Identify the principle of internal control that is being followed in the case: A prenumbered delivery docket is prepared for each shipment of goods to customers. *Narrations in the general journals are not required.
The accountant at Terry Farm Stores prepares a monthly bank reconciliation. On 31 August she received a bank statement from QBE Bank, which had a credit balance of $8 950. Terry Farm Stores' cash at bank account per the general ledger showed a debit balance of $15 050. A comparison of the bank statement with the cash payments and cash receipts journals revealed the following information: (1) Outstanding EFTs at 31 August totaled $1 550 (2) QBE bank mistakenly included a cheque payment on Terry Farm Stores' bank statement that related to Tolga Ltd. The cheque amount was for $2 180. The mistake will be corrected in September. (3) The bank statement included bank charges of $20. (4) In reviewing the cheque payments, a mistake was discovered on cheque no. 574 for the payment of rent expense. The amount of the cheque was for $5 510 but was recorded in the cash payments journal as $5 150. (5) Cash receipts recorded in the cash receipts journal on 30 August of $4 300 were not on the bank statement (6) The bank statement showed a reversal entry of $790 that was originally deposited by P. Macca, a customer, to Terry Farm Stores. Required (a) Prepare a bank reconciliation for Terry Farm Stores at 31 August. (b) Prepare the adjusting entries as at 31 August (c) Identify the principle of internal control that is being followed in the case: A prenumbered delivery docket is prepared for each shipment of goods to customers. *Narrations in the general journals are not required.
Century 21 Accounting Multicolumn Journal
11th Edition
ISBN:9781337679503
Author:Gilbertson
Publisher:Gilbertson
Chapter5: Cash Control Systems
Section: Chapter Questions
Problem 2AP
Related questions
Question
Transcribed Image Text:The accountant at Terry Farm Stores prepares a monthly bank reconciliation.
On 31 August she received a bank statement from QBE Bank, which had a
credit balance of $8 950. Terry Farm Stores' cash at bank account per the
general ledger showed a debit balance of $15 050. A comparison of the bank
statement with the cash payments and cash receipts journals revealed the
following information:
(1) Outstanding EFTs at 31 August totaled $1 550
(2) QBE bank mistakenly included a cheque payment on Terry Farm Stores'
bank statement that related to Tolga Ltd. The cheque amount was for $2 180.
The mistake will be corrected in September.
(3) The bank statement included bank charges of $20.
(4) In reviewing the cheque payments, a mistake was discovered on cheque
no. 574 for the payment of rent expense. The amount of the cheque was for
$5 510 but was recorded in the cash payments journal as $5 150.
(5) Cash receipts recorded in the cash receipts journal on 30 August of $4
300 were not on the bank statement
(6) The bank statement showed a reversal entry of $790 that was originally
deposited by P. Macca, a customer, to Terry Farm Stores.
Required
(a) Prepare a bank reconciliation for Terry Farm Stores at 31 August.
(b) Prepare the adjusting entries as at 31 August
(c) Identify the principle of internal control that is being followed in the case:
A prenumbered delivery docket is prepared for each shipment of goods to
customers.
*Narrations in the general journals are not required.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:
9781337679503
Author:
Gilbertson
Publisher:
Cengage
College Accounting (Book Only): A Career Approach
Accounting
ISBN:
9781337280570
Author:
Scott, Cathy J.
Publisher:
South-Western College Pub
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:
9781337679503
Author:
Gilbertson
Publisher:
Cengage
College Accounting (Book Only): A Career Approach
Accounting
ISBN:
9781337280570
Author:
Scott, Cathy J.
Publisher:
South-Western College Pub
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Financial Accounting
Accounting
ISBN:
9781305088436
Author:
Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:
Cengage Learning
Survey of Accounting (Accounting I)
Accounting
ISBN:
9781305961883
Author:
Carl Warren
Publisher:
Cengage Learning