please need help with my accounting h/w?

Question

E7-3. The following control procedures are used in Elke Company for over-the-counter cash receipts.
1. Cashiers are experienced; thus, they are not bonded.
2. All over-the-counter receipts are registered by three clerks who share a cash register with a single cash drawer.
3. To minimize the risk of robbery, cash in excess of $100 is stored in an unlocked attaché case in the stock room until it is deposited in the bank.
4. At the end of each day the total receipts are counted by the cashier on duty and reconciled to the cash register total.
5. The company accountant makes the bank deposit and then records the day’s receipts.
Instructions:
(a) For each procedure, explain the weakness in internal control and identify the control principle that is violated.
(b) For each weakness, suggest a change in the procedure that will result in good internal control.

E7-6. Leng Xiong is unable to reconcile the bank balance at January 31. Leng’s reconciliation is shown here.
Cash balance per bank $3,660.20
Add: NSF check 370.00
Less: Bank service charge 25.00
Adjusted balance per bank $4,005.20

Cash balance per books $3,975.20
Less: Deposits in transit 590.00
Add: Outstanding checks 670.00
Adjusted balance per books $4,055.20

Instructions:
(a) What is the proper adjusted cash balance per bank?
(b) What is the proper adjusted cash balance per books?
(c) Prepare the adjusting journal entries necessary to determine the adjusted cash balance per books.

Answer 1

1. Cashiers are experienced; thus, they are not bonded.
All employees who handle cash should be bonded.

2.All over-the-counter receipts are registered by three clerks who share a cash register with a single cash drawer.
Responsibilities should be established and divided. If they share a register and at the end of the day the cash doesn't tally, you wouldn't know who's the cashier at fault.

3.To minimize the risk of robbery, cash in excess of $100 is stored in an unlocked attaché case in the stock room until it is deposited in the bank.
All assets should be safeguarded and insured. Excess cash should be locked in a safe and the key held by just 1 staff.

4.At the end of each day the total receipts are counted by the cashier on duty and reconciled to the cash register total.
Responsibilities should be divided. Another employee should reconcile the cash.

5.The company accountant makes the bank deposit and then records the day’s receipts.
Recordkeeping and custody/handling of cash should be separated. 2 different persons should do these tasks.

(a) What is the proper adjusted cash balance per bank?
Bal. per bank statement $3,660.20
Add:
Deposit in transit $590.00
Less:
Outstanding cheques ($670.00)
Adjusted bal. per bank $3,580.20

(b)What is the proper adjusted cash balance per books?
Bal. per books $3,975.20
Less:
NSF cheque ($370.00)
Bank charges ($25.00)
Adjusted bal. per books $3,580.20

(c)Prepare the adjusting journal entries necessary to determine the adjusted cash balance per books
Dr A/cs receivable 370.00
Dr Bank charges 25.00
Cr Cash at bank 395.00