Exercise 10-1 (15 minutes)

1. A cash register (with a locked record) should be used at the

sales
stand—it should also be anchored to the stand. If a cash
register
cannot be used, the total sales value of the shirts and
sunglasses
given to the employee each day should be calculated. The
employee
should sign a receipt for the merchandise and the amount of
cash that
he or she has been given. At the end of each day, the
employee
should be required to return cash plus remaining shirts and
sunglasses equal to the amount taken to the stand—possibly
consider
one or two return trips if the amounts are large.

2. The employee should sign a receipt for the total amount of

cash he or
she is given each weekend. Each time the employee makes a
purchase, he or she should obtain a signed sales receipt for
the
payment. The sales receipt should list the items purchased and
the
prices paid. When the employee returns to the store, the total
value of
the signed sales receipts plus any remaining cash should equal
the
amount of cash originally given to the employee. Also, the
merchandise brought back by the employee should be the
same as the
items listed on the signed sales receipts.
Problem 10-4 (30 minutes)
1.
CLARK COMPANY
BANK RECONCILIATION
31 JULY 2006
Bank statement balance............ $28,020
Deposit of 31 July .................... 10,152
38,172
Checks No. 3031...... $1,380
3065...... 336
3069...... 2,148 (3,864)
Adjusted bank balance.............. $34,308

Bookbalance....................................$26,193.
Proceeds of note less
collection charge............................ 8,955
35,148
NSF check...................... $ 805
Service charge............... 15
Error (Check 3056)........ 20 ( 840)
Adjusted book balance......................$34,308

2.
July 31 Cash............................................................ 8,955
Collection Expense ..................................................... 45
Notes Receivable...................................................
9,000
To record note collection less fees.
July 31 Accounts Receivable—J. Shaw ...................805
Cash.......................................................................
. 805
To charge account for NSF check plus fees.

July 31 Miscellaneous Expenses ............................. 15

Cash.......................................................................
. 15
To record bank service fee.

July 31 Rent Expense.................................................. 20

Cash........................................................................
20
To correct an entry error.

3.
a. If the company's Cash account balance of $26,193 is listed
on the bank
reconciliation as $26,139 then:
(i) The final balance that results from adjusting the bank
statement
balance will not be affected by the error; and

(ii) The final balance that results from adjusting the book
balance of
cash will be understated by $54 ($26,193 - $26,139), and the
bank
reconciliation will not balance.

b. The bank's collection of the $9,000 note less the $45

collection fee
should have been added to the book balance of cash. Instead,
it was
added to the bank statement balance. As a result:
(i) The final balance that results from adjusting the bank
statement
balance will be overstated by $8,955; and

(ii) The final balance that results from adjusting the book
balance will
be understated by $8,955.
Problem 10-6
Problem

1.
SUCCESS SYSTEMS
BANK RECONCILIATION
31 MARCH 2006
Bank statement balance............ $77,354
Bank error 500
Deposits in Transit....................... 0
77,854
Outstanding Check..................... (128)
Adjusted bank balance.............. $77,726

Book balance................................$77,845
Bank interest................................ 33
77,878
Safety deposit rental .…$ 50
Charge for checks.......... 102 (152)
Adjusted book balance................$77,726
2.
Mar. 25 Miscellaneous Expense ................. 50
Cash................................................................ 50
To record safety deposit box rental.

26 Miscellaneous Expense ..................................... 102

Cash...................................................... 102
To record charge for printing checks

31 Cash..................................................................... 33
Interest Revenue............................................ 33
To record interest earned.