Question

The following information is available to reconcile Clark Company’s book balance of cash with its bank statement cash balance as of July 31, 2011.
On July 31, the company’s Cash account has a $26,193 debit balance, but its July bank statement shows a $28,020 cash balance.
Check No. 3031 for $1,380 and Check No. 3040 for $552 were outstanding on the June 30 bank reconciliation. Check No. 3040 is listed with the July canceled checks, but Check No. 3031 is not. Also, Check No. 3065 for $336 and Check No. 3069 for $2,148, both written in July, are not among the canceled checks on the July 31 statement.
In comparing the canceled checks on the bank statement with the entries in the accounting records, it is found that Check No. 3056 for July rent was correctly written and drawn for $1,250 but was erroneously entered in the accounting records as $1,230.
A credit memorandum enclosed with the July bank statement indicates the bank collected $9,000 cash on a non-interest-bearing note for Clark, deducted a $45 collection fee, and credited the remainder to its account. Clark had not recorded this event before receiving the statement.
A debit memorandum for $805 lists a $795 NSF check plus a $10 NSF charge. The check had been received from a customer, Jim Shaw. Clark has not yet recorded this check as NSF.
Enclosed with the July statement is a $15 debit memorandum for bank services. It has not yet been recorded because no previous notification had been received.
Clark’s July 31 daily cash receipts of $10,152 were placed in the bank’s night depository on that date, but do not appear on the July 31 bank statement.
Required
1. Prepare the bank reconciliation for this company as of July 31, 2011.
2. Prepare the journal entries necessary to bring the company’s book balance of cash into conformity with the reconciled cash balance as of July 31, 2011.

Pepco Co. establishes a petty cash fund for payments of small amounts. The following transactions involving the petty cash fund occurred in January (the last month of the company’s fiscal year).
Jan. 3 A company check for $150 is written and made payable to the petty cashier to establish the petty cash fund.
14 A company check is written to replenish the fund for the following expenditures made since
January 3.
a. Purchased office supplies for $16.29 that are immediately used up.
b. Paid $17.60 COD shipping charges on merchandise purchased for resale, terms FOB shipping
point. Pepco uses the perpetual system to account for inventory.
c. Paid $36.57 to All-Tech for minor repairs to a computer.
d. Paid $14.82 for items classified as miscellaneous expenses.
e. Counted $62.28 remaining in the petty cash box.
15 Prepared a company check for $25 to increase the fund to $175.
31 The petty cashier reports that $17.35 remains in the fund. A company check is written to replenish the fund for the following expenditures made since January 14.
f. Paid $40 to The Smart Shopper for an advertisement in January’s newsletter.
g. Paid $38.19 for postage expenses.
h. Paid $58 to Take-You-There for delivery of merchandise, terms FOB destination.
31 The company decides that the January 15 increase in the fund was too little. It increases the fund by another $75, leaving a total of $250.
Required
1. Prepare journal entries to establish the fund on January 3, to replenish it on January 14 and January 31, and to reflect any increase or decrease in the fund balance on January 15 and 31. Give me a table format

Answer 1

Below are the requested items in table format.

1) Clark Company — Bank Reconciliation (July 31, 2011)

Bank side
| Description | Amount |
|---|---:|
| Bank balance per statement (July 31) | 28,020.00 |
| Add: Deposit in transit (July 31 receipts) | 10,152.00 |
| Less: Outstanding checks: Check No. 3031 | (1,380.00) |
|     Check No. 3065 | (336.00) |
|     Check No. 3069 | (2,148.00) |
| Adjusted bank balance (reconciled cash) | 34,308.00 |

Book (company) side
| Description | Amount |
|---|---:|
| Book balance — Cash per books (July 31) | 26,193.00 |
| Add: Note collected by bank (amount collected) | 9,000.00 |
| Less: Bank collection fee deducted by bank | (45.00) |
| Less: NSF check returned (Jim Shaw) | (795.00) |
| Less: NSF charge | (10.00) |
| Less: Bank service charge (debit memo) | (15.00) |
| Less: Error in recording Check No. 3056 (recorded 1,230; actual 1,250) | (20.00) |
| Adjusted book balance (reconciled cash) | 34,308.00 |

(Reconciled cash balance = $34,308.00)

2) Clark Company — Journal entries to adjust books to reconciled cash (date: July 31, 2011)

| Date | Account titles and explanations | Debit | Credit |
|---|---|---:|---:|
| July 31 | Cash (bank collection of note) | 9,000.00 | |
| | Notes Receivable | | 9,000.00 |
| | (To record note collected by bank) | | |
| July 31 | Bank Service Charges (collection fee) | 45.00 | |
| | Cash | | 45.00 |
| | (To record bank's collection fee) | | |
| July 31 | Accounts Receivable — Jim Shaw | 795.00 | |
| | Bank Service Charges (NSF fee) | 10.00 | |
| | Cash | | 805.00 |
| | (To record returned (NSF) customer check and bank NSF charge) | | |
| July 31 | Bank Service Charges (bank service charge) | 15.00 | |
| | Cash | | 15.00 |
| | (To record bank service charge on statement) | | |
| July 31 | Rent Expense (to correct entry for Check No. 3056) | 20.00 | |
| | Cash | | 20.00 |
| | (To correct rent check recorded at $1,230 instead of $1,250) | | |

Notes:
- The net effect of the note collection and fees is reflected by the two entries for the note and the collection fee.
- All entries bring the book Cash account into conformity with the reconciled balance $34,308.

3) Pepco Co. — Petty cash journal entries (January). (Perpetual inventory system)

A. Establish fund (Jan. 3)
| Date | Account titles and explanation | Debit | Credit |
|---|---|---:|---:|
| Jan. 3 | Petty Cash | 150.00 | |
| | Cash (Bank) | | 150.00 |
| | (To establish petty cash fund) | | |

B. Replenish fund (Jan. 14). Details of vouchers since Jan. 3:
- Office supplies (expense) = 16.29
- Freight-in / Inventory (FOB shipping point) = 17.60
- Repairs & maintenance = 36.57
- Miscellaneous expense = 14.82
- Cash counted on hand = 62.28
Replenishment needed = 150.00 − 62.28 = 87.72. Vouchers total = 85.28. Cash short = 2.44.

| Date | Account titles and explanation | Debit | Credit |
|---|---|---:|---:|
| Jan. 14 | Office Supplies Expense | 16.29 | |
| | Inventory (Freight-in) | 17.60 | |
| | Repairs & Maintenance Expense | 36.57 | |
| | Miscellaneous Expense | 14.82 | |
| | Cash Over and Short (shortage) | 2.44 | |
| | Cash (Bank) | | 87.72 |
| | (To replenish petty cash; record expenditures and shortage) | | |

C. Increase petty cash (Jan. 15) — increase fund from $150 to $175
| Date | Account titles and explanation | Debit | Credit |
|---|---|---:|---:|
| Jan. 15 | Petty Cash | 25.00 | |
| | Cash (Bank) | | 25.00 |
| | (To increase petty cash fund to $175) | | |

D. Replenish fund (Jan. 31). Details since Jan. 14:
- Advertising = 40.00
- Postage = 38.19
- Delivery expense (FOB destination — expense to buyer is seller's; here Pepco paid delivery, record Delivery Expense) = 58.00
Fund balance before replenishment = $175.00 (after Jan. 15). Cash counted = 17.35. Replenish needed = 175.00 − 17.35 = 157.65. Vouchers total = 136.19. Cash short = 21.46.

| Date | Account titles and explanation | Debit | Credit |
|---|---|---:|---:|
| Jan. 31 | Advertising Expense | 40.00 | |
| | Postage Expense | 38.19 | |
| | Delivery Expense | 58.00 | |
| | Cash Over and Short (shortage) | 21.46 | |
| | Cash (Bank) | | 157.65 |
| | (To replenish petty cash to $175; record expenditures and shortage) | | |

E. Increase petty cash (Jan. 31) — increase fund from $175 to $250
| Date | Account titles and explanation | Debit | Credit |
|---|---|---:|---:|
| Jan. 31 | Petty Cash | 75.00 | |
| | Cash (Bank) | | 75.00 |
| | (To increase petty cash fund to $250) | | |

Summary notes for Pepco entries:
- Freight-in (17.60) debited to Inventory because Pepco uses perpetual inventory and FOB shipping point.
- Delivery expense (58.00) is charged to Delivery Expense (freight-out or delivery) because terms were FOB destination.
- Cash Over and Short is used to record shortages (positive debit balances here). If Cash Over and Short were a credit (overage), it would reduce expense/increase income.
- All replenishment checks equal the amount needed to restore the petty cash fund to its stated level.

If you want, I can (a) show a one‑line combined journal entry for each Clark adjustment instead of multiple lines, (b) prepare T‑accounts showing the effect, or (c) produce these tables as a downloadable spreadsheet.