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    Internal Control and Bank Reconciliations

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    Can you shed some light on theses questions I'm really lost and need direction.

    QS 8-6

    1. For each of the following items, indicate whether its amount

    (i) affects the bank or book side of a bank reconciliation and
    (ii) represents an addition or a subtraction in a bank reconciliation:

    a. Outstanding checks d. Unrecorded deposits g. Bank service charges
    b. Debit memos e. Interest on cash balance
    c. NSF checks f. Credit memos

    2. Which of the items in part 1 require an adjusting journal entry?

    8-3 Analyzing internal control

    Bemis Company is a rapidly growing start-up business. Its recordkeeper, who was hired one year ago, left town after the company's manager discovered that a large sum of money had disappeared over the past six months. An audit disclosed that the recordkeeper had written and signed several checks made payable to her fiancé and then recorded the checks as salaries expense. The fiancé, who cashed the checks but never worked for the company, left town with the recordkeeper. As a result, the company incurred an uninsured loss of $84,000.

    Evaluate Bemis's internal control system and indicate which principles of internal control appear to have been ignored.

    8-4 Petty cash fund with a shortage

    Gannon Company establishes a $400 petty cash fund on September 9. On September 30, the fund shows $166 in cash along with receipts for the following expenditures: transportation-in, $32; postage expenses, $113; and miscellaneous expenses, $87. The petty cashier could not account for a $2 shortage in the fund. Gannon uses the perpetual system in accounting for merchandise inventory. Prepare:

    (1) the September 9 entry to establish the fund and

    (2) the September 30 entry to both reimburse the fund and reduce it to $300.

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    https://brainmass.com/business/internal-controls/internal-control-and-bank-reconciliations-169707

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    QS 8-6

    1. For each of the following items, indicate whether its amount (i) affects the bank or book side of a bank reconciliation and (ii) represents an addition or a subtraction in a bank reconciliation:

    a. Outstanding checks - bank side, addition
    b. Debit memos - book side, subtraction
    c. NSF checks - book side, subtraction
    d. Unrecorded deposits - bank side, addition
    e. Interest on cash balance - book side, addition
    f. Credit memos - book side, addition
    g. ...

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