Exam 5: Fraud,Internal Control,and Cash

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Question 101

Multiple Choice

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Lenore,Inc.gathered the following information from its accounting records and the October bank statement to prepare the October bank reconciliation: What journal entry would Lenore,Inc.be required to record for the interest received from the bank?

A) Debit Interest Revenue and credit Cash for $1,700.
B) No journal entry is required because the bank is aware of the interest payment.
C) Debit Interest Receivable and credit Interest Revenue for $1,700.
D) Debit Cash and credit Interest Revenue for $1,700.

E) A) and C)
F) A) and B)

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Question 102

Essay

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McDermott Company's bank statement for September 30 showed an ending cash balance of $1,350.The company's Cash account in its general ledger showed a $995 debit balance. The following information was also available as of September 30. The bank deducted $125 for an NSF check from a customer deposited on September 15. The September 30 cash receipts,$1,250,were placed in the bank's night depository after banking hours on that date and this amount did not appear on the September 30 bank statement. A $15 debit memorandum for checks printed by the bank was included with the canceled checks. Outstanding checks amounted to $1,145. Included with the bank statement was a credit memo in the amount of $875 for an EFT in payment of a customer's account. Included with the canceled checks was a check for $275,drawn on the account of another company. Required: Part a.Prepare a bank reconciliation as of September 30. Part b.Prepare the journal entries for the items on the company's bank reconciliation as of September 30.