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At the end of February Howard Productions accounting records reveal a balance for cash equal to $1975 However the balance of cash in the bank at the end of February is only 1

At the end of February, Howard Productions accounting records reveal a balance for cash equal to $19,175. However, the balance of cash in the bank at the end of February is only $2,235. Howard is concerned and asks the company s accountant to reconcile the two balances. Examination of the bank statement and company records at the end of February reveals the following information: NSF checks...................... $5,228................ Service fees........... $149 Deposits outstanding ............7,642...... Checks outstanding............. 479 In addition, during February the company s accountant wrote a check to one of its suppliers for $100. The check was recorded correctly in the company s records for $100 but processed incorrectly by the bank for $1,000. Howard has contacted the bank, which has agreed to fix the error. Finally, a petty cash fund of $3,500 was established during February. This amount was withdrawn from the checking account but not recorded. Required: 1. Calculate the correct ending balance of cash at the end of February. 2. Discuss any problems you see with the company s cash procedures.

May 18 2020 View more View Less

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