Download Abbott Company completed the bank reconciliation and needs to record the $30 service charg and more Exams Financial Accounting in PDF only on Docsity! CHAPTER SEVEN DSM QUESTION ONE Abbott Company completed the bank reconciliation and needs to record the $30 service charge from the bank. The journal entry to record this transaction would be: To record the $30 service charge from the bank, you need to debit Bank Expense and credit Cash. QUESTION TWO The journal entry to set up a Petty Cash Fund for $500 to pay incoming delivery expenses would be: To set up a Petty Cash Fund the journal entry would be to debit Petty Cash and credit Cash. QUESTION THREE The following was paid out of the Petty Cash account: $200 for Office Supplies $100 for Delivery Expense $300 is needed to replenish the Petty Cash back to the original balance. The journal entry to record the replenishing of Petty Cash would be: The amount to replenish Petty Cash is the same as the total of the two items paid out of Petty Cash so there is no Cash Short and Over. Therefore, you debit the Office Supplies and Delivery Expense, and credit Cash. Note: To replenish the petty cash fund for the $300 spent, the $300 must be withdrawn from the company’s Cash account and put into the Petty Cash account. The Petty Cash account is unchanged and maintains a constant balance. QUESTION FOUR Abbott Company completed the bank reconciliation and needs to record the $10 earned in interest from the bank balance. The journal entry to record this transaction would be: To record the interest received from our bank balance, we would debit Cash and credit Interest Revenue. QUESTION FIVE Which of the following is subtracted from the book balance in a bank reconciliation? Bank service charges are subtracted from the book balance for a bank reconciliation. QUESTION SIX The following was paid out of the Petty Cash account: $200 for Office Supplies $100 for Delivery Expense After counting the cash that is left in Petty Cash, $320 is needed to replenish the Petty Cash back to the original balance. The journal entry to record the replenishing of Petty Cash would be: Since the amount needed to replenish petty cash is more than the sum of the petty cash tickets, Cash Short & Over must be debited for $20. Office Supplies and Delivery Expense are debited and the Cash account is credited. Therefore, the entry is to debit Office Supplies for $200, Delivery Expense for $100, and Cash Short & Over for $20. The credit is to Cash for $320 to replenish the original amount to Petty Cash. Note: To replenish the petty cash fund for the $320 spent, the $320 must be withdrawn from the company’s Cash account and put into the Petty Cash account. The Petty Cash account is unchanged and maintains a constant balance.
