Question

2, Interest earned on the cash balance in the bank is recorded by the bank as:

Multiple Choice

• An increase in the bank’s asset account.

• A decrease in the bank’s asset account.

• A decrease in the depositor’s bank account.

• An increase in the depositor’s bank account.

• An increase in the bank’s expense account.

3, Which of the following events would cause a bank to reduce a depositor's account?

Multiple Choice

• The depositor orders new checks through the bank at a cost of $50.

• The bank collects a note receivable and related interest on the depositor's behalf.

• There are outstanding checks drawn on the account at month-end.

• There are deposits in transit on the account at month-end.

• The bank corrects an error from previous month by adding $75 to the depositor account.

4,

Wilson Co. set up a petty cash fund for payments of small amounts. The following transactions involving the petty cash fund occurred in May.
  

May		1		Prepared a company check for $400 to establish the petty cash fund.
May		15		Prepared a company check to replenish the fund for the following expenditures made since May 1.
				a. Paid $133 for janitorial services.
				b. Paid $100 for miscellaneous expenses.
				c. Paid postage expenses of $66.
				d. Paid $33 to Facebook for advertising expense.
				e. Counted $76 remaining in the petty cash box.
May		16		Prepared a company check for $200 to increase the fund to $600.
May		31		The petty cashier reports that $240 cash remains in the fund. A company check is drawn to replenish the fund for the following expenditures made since May 15.
				f. Paid postage expenses of $210.
				g. Reimbursed the office manager for business mileage, $105.
				h. Paid $35 to deliver merchandise to a customer, terms FOB destination.
May		31		The company decides that the May 16 increase in the fund was too large. It reduces the fund by $160, leaving a total of $440.

• Requirement
• General Journal
• General Ledger
• Trial Balance
• Impact on Income

Indicate the impact each transaction had on net income.  Decreases to net income should be indicated with a minus sign.

Dates:

May 01

to:

May 31

Transaction Impact transaction has on income: Amount of increase (decrease) May 1) Prepared a company check for $400 to establish the petty cash fund. Net income was unchanged May 15) Prepared a company check to replenish the fund for the following expenditures made since May 1: $133 for janitorial services, $100 for miscellaneous expenses, postage expenses of $66, $33 to Facebook for advertising expense. Counted $76 remaining in the petty cash box. May 16 Prepared a company check for $200 to increase the fund to $600. Net income was unchanged May 31 The petty cashier reports that $240 cash remains in the fund. A company check is drawn to replenish the fund for the following expenditures made since May 15: postage expenses of $210, business mileage, $105, $35 to deliver merchandise to a customer, terms FOB destination. May 31 The company decides that the May 16 increase in the fund was too large. It reduces the fund by $160, leaving a total of $440. Net income was unchanged In total, net income increased (decreased) by: $0

Answer 1