Question

Which of the following is a reconciling item on the bank side of a bank reconciliation?

	1.	Cancelled cheques
	2.	Outstanding cheques
	3.	both outstanding cheques and NSF cheques
	4.	NSF cheques

A cheque returned by a bank because the issuer's cash account balance could not cover the cheque is called:

	1.	a blank cheque
	2.	a certified cheque
	3.	a NSF cheque
	4.	an outstanding cheque

On 1 January, Bochao Properties establishes a petty cash fund for $200.

On 31 January, the fund's custodian prepares a petty cash report showing $130 in cash remaining and receipts for $12 for miscellaneous items, $20 for postage and $35 for supplies.

The accountant replenishes the fund on 31 January.

When making the journal entry on 31 January, what is the CREDIT?

	1.	Petty Cash $67
	2.	Cash $70
	3.	Petty Cash $70
	4.	Petty Cash $67

Thanks for your help!

Answer 1

Answer to the first question:

The correct option is 2 – outstanding cheques.

Explanation: Outstanding checks are those issued by a depositor but not paid by the bank on which they are drawn. The party receiving the check may not have deposited it immediately. Once deposited, checks may take several days to clear the banking system. Hence, we subtract them from the bank balance in the bank reconciliation.

Answer to the second question:

The correct option is 3 – a NSF cheque

Explanation: It also known as a returned cheque. An NSF (not sufficient funds) cheque is a cheque that has been deposited but is returned by a bank because there are insufficient funds in the bank account of the customer who wrote the cheque (the issuer of the check)

Answer to the third question:

The correct option is 2 – cash $ 70.

Companies replenish the petty cash fund at the end of the accounting period or sooner if it becomes low. The cash account will be credited to bring the petty cash account to its established balance. We will credit with $ 70 because $ 130 is the remaining balance, and to bring it to the established balance of $ 200, we will need $ 70.