Bank reconciliation Obj 5 Adjusted balance: $15,310 An accounting clerk for Westwind Co. prepared the following bank reconciliation: WESTWIND CO. Bank Reconciliation August 31, 20Y6 Cash balance according to companyâs records $ 6,800 Add: Outstanding checks $4,190 Error by Westwind Co. in recording Check No. 01-115 as $830 instead of $380 450 Note for $7,500 collected by bank, including interest 8,100 12,740 Deduct: Deposit in transit on August 31 $2,175 $19,540 Bank service charges 40 2,215 Cash balance according to bank statement $17,325 a. From the bank reconciliation data, prepare a new bank reconciliation for Westwind Co., using the format shown in the illustrative problem. b. If a balance sheet were prepared for Westwind Co. on August 31, 20Y6, what amount should be reported for cash?

E5-22: Bank reconciliation Obj 5

Corrected adjusted balance: $24,110 Identify the errors in the following bank reconciliation: DAKOTA CO. Bank Reconciliation For the Month Ended June 30, 20Y3 Cash balance according to bank statement $22,900 Add outstanding checks: No. 7715 $1,450 7760 915 7764 1,850 7765 775 4,990 $27,890 Deduct deposit of June 30, not recorded by bank 6,200 Adjusted balance $21,690 Cash balance according to companyâs records $15,625 Add: Proceeds of note collected by bank: Principal $6,000 Interest 360 $6,360 Service charges 30 6,390 $22,015 Deduct: Check returned because of insufficient funds $ 545 Error in recording June 20 deposit of $5,200 as $2,500 2,700 3,245 Adjusted balance $18,770 E5-23: Using bank reconciliation to determine cash receipts stolen Obj 2, 3, 5 Pala Co. records all cash receipts on the basis of its cash register tapes. Pala Co. discovered during April 20Y1 that one of its sales clerks had stolen an undetermined amount of cash receipts when she took the daily deposits to the bank. The following data have been gathered for April: Cash in bank according to the company records $19,565 Cash according to the April 30, 20Y1, bank statement 28,175 Outstanding checks as of April 30, 20Y1 12,100 Bank service charges for April 75 Note receivable, including interest collected by bank in April 3,710 No deposits were in transit on April 30. a. Determine the amount of cash receipts stolen by the sales clerk. b. What accounting controls would have prevented or detected this theft?

E5-24: Recording petty cash fund transactions Obj 6

Illustrate the effect on the accounts and financial statements of the following transactions: a. Established a petty cash fund of $750. b. The amount of cash in the petty cash fund is now $140. Replenished the fund, based on the following summary of petty cash receipts: office supplies, $325; miscellaneous selling expense, $200; miscellaneous administrative expense, $85.

E5-25: Recording petty cash fund transactions Obj 6

Illustrate the effect on the accounts and financial statements of the following transactions: a. Established a petty cash fund of $500. b. The amount of cash in the petty cash fund is now $45. Replenished the fund, based on the following summary of petty cash receipts: office supplies, $175; miscellaneous selling expense, $190; miscellaneous administrative expense, $90. E5-26: Variation in cash flows Obj 7 Mattel, Inc., designs, manufactures, and markets toy products worldwide. Mattelâs toys include Barbie⢠fashion dolls and accessories, Hot Wheelsâ¢, and Fisher-Price brands. For a recent year, Mattel reported the following net cash flows from operating activities (in thousands): First quarter ending March 31 $ 171,506 Second quarter ending June 30 (232,557) Third quarter ending September 30 (40,109) Fourth quarter December 31 986,778 Explain why Mattel reports negative net cash flows from operating activities during the first three quarters, yet reports positive cash flows for the fourth quarter and net positive cash flows for the year.