Principles Of Auditing & Other Assurance Services
21st Edition
ISBN: 9781259916984
Author: WHITTINGTON, Ray, Pany, Kurt
Publisher: Mcgraw-hill Education,
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Question
Chapter 10, Problem 48P
a.
To determine
Prepare a working paper comparison of:
(1) Total of returned checks or outstanding checks
(2) Total per client’s records of checks outstanding at December 31 plus checks issued from January 1–14.
b.
To determine
Suggest four possible explanations for the situation disclosed in the audit paper. Provide desirable actions in each case.
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Students have asked these similar questions
During the audit of Sunset Building Supply, you are given the following year-end bank reconciliation prepared by the client:
Balance per 12/31 bank statment: $48,734
Add: Deposits in transit: $4,467
$53,201
Less: Checks Outstanding $20,758
Balance Per Ledger, 12/31 $32,443
According to the client’s accounting records, checks totaling $31,482 were issued between January 1 and January 14 of the following year. You have obtained a cutoff bank statement dated January 14 containing paid checks amounting to $50,440. Of the checks outstanding at December 31, checks totaling $3,600 were not returned in the cutoff statement, and of those issued per the accounting records in January, checks totaling $8,200 were not returned.
Suggest four possible explanations for the situation disclosed in your working paper. State what action you would take in each case, including any adjusting entry…
Please help me with this problem. Answer requirement (a) and (b).
During the audit of Sunset Building Supply, you are given the following year-end bank reconciliation prepared by the client:
Balance per 12/31 bank statement: $97,468
Add: Deposits in transit: $8,934
Total $106,402
Less: Checks Outstanding $41,516
Balance Per Ledger, 12/31 $64,886
According to the client’s accounting records, checks totaling $62, 964 were issued between January 1 and January 14 of the following year. You have obtained a cutoff bank statement dated January 14 containing paid checks amounting to $100,880. Of the checks outstanding at December 31, checks totaling $7,200 were not returned in the cutoff statement, and of those issued per the accounting records in January, checks totaling $16,400 were not returned.
Required:
a. Prepare a working paper comparing (1) the total of all checks returned by the bank or still outstanding with (2)…
By preparing a four-column bank reconciliation ("proof of cash") at year-end, an auditor will generally be able to detect:
a. An unrecorded deposit made at the bank at the end of the month.
b. A second payment of an account payable which had already been paid in full two months earlier.
c. An embezzlement of cash receipts not recorded in the cash receipts journal before they had been deposited into the bank.
d. A receivable collected that had previously been written off as uncollectible.
Chapter 10 Solutions
Principles Of Auditing & Other Assurance Services
Ch. 10 - Prob. 1RQCh. 10 - Prob. 2RQCh. 10 - Prob. 3RQCh. 10 - Prob. 4RQCh. 10 - Prob. 5RQCh. 10 - Prob. 6RQCh. 10 - Prob. 7RQCh. 10 - Prob. 8RQCh. 10 - Prob. 9RQCh. 10 - Prob. 10RQ
Ch. 10 - Prepare an example of lapping of cash receipts,...Ch. 10 - Prob. 12RQCh. 10 - Prob. 13RQCh. 10 - Prob. 14RQCh. 10 - Prob. 15RQCh. 10 - Prob. 16RQCh. 10 - Explain two procedures by which auditors may...Ch. 10 - Prob. 18RQCh. 10 - Prob. 19RQCh. 10 - Prob. 20RQCh. 10 - Prob. 21RQCh. 10 - Prob. 22RQCh. 10 - Prob. 23RQCh. 10 - Prob. 24RQCh. 10 - Prob. 25RQCh. 10 - Prob. 26QRACh. 10 - Henry Mills is responsible for preparing checks,...Ch. 10 - During the first few months of the year, John...Ch. 10 - Prob. 29QRACh. 10 - Prob. 30QRACh. 10 - Prob. 31QRACh. 10 - Prob. 32QRACh. 10 - Prob. 33QRACh. 10 - Prob. 34QRACh. 10 - Prob. 35QRACh. 10 - Prob. 36QRACh. 10 - Prob. 37QRACh. 10 - Select the best answer for each of the following...Ch. 10 - Prob. 38BOQCh. 10 - Prob. 38COQCh. 10 - Prob. 38DOQCh. 10 - Prob. 38EOQCh. 10 - Prob. 38FOQCh. 10 - Reconciliation of the bank account should not be...Ch. 10 - The auditors suspect that a clients cashier is...Ch. 10 - Prob. 38IOQCh. 10 - Prob. 38JOQCh. 10 - Prob. 38KOQCh. 10 - Prob. 38LOQCh. 10 - Which of the following represents a correct...Ch. 10 - Which of the following correctly identifies a risk...Ch. 10 - Which of the following correctly identifies a risk...Ch. 10 - Prob. 39DOQCh. 10 - Prob. 39EOQCh. 10 - Prob. 39FOQCh. 10 - Prob. 40OQCh. 10 - Prob. 41OQCh. 10 - Prob. 42OQCh. 10 - Prob. 43OQCh. 10 - Prob. 44OQCh. 10 - Prob. 45OQCh. 10 - Prob. 46PCh. 10 - Prob. 47PCh. 10 - Prob. 48PCh. 10 - Prob. 49PCh. 10 - Prob. 50ITCCh. 10 - Prob. 51ITCCh. 10 - Prob. 52RDCCh. 10 - Prob. 53EC
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- The bank reconciliation revealed that one deposit had cleared the bank two weeks after the date of the deposit. Should this be of concern? Why, or why not?arrow_forwardYou are auditing the cash account of Vhina Inc. for the fiscal year ended July 31, 2020. The client has not prepared the July 31, bank reconciliation. The following information were made available: Audit notes: a. Bank reconciliation in June included the following information: Bank statement balance, June, P172,590; Deposits in transit, P18,000; Outstanding checks, P52,260, and; Balance per general ledger, June, P140,330. b. Checks clearing the bank in July, outstanding by the end of June was at P50,760. c. Checks clearing the bank in July and were recorded in the July cash disbursement journal was at P614,010. d. A check for P31,800 cleared the bank, but had not been recorded in the cash disbursement journal. It was for a payment of an accounts payable. e. A check for P11,880 was erroneously charged by the bank to Vhina Inc. f. Deposits included P18,000 from June and P733,680 from July. g. The bank charged Vhina Inc.'s account for a non-sufficient-fund check totaling to P9,330 The…arrow_forwardDuring the audit of Sunset Building Supply, you are given the following year-end bank reconciliation prepared by the client: Balance per 12/31 bank statment: $48,734 Add: Deposits in transit: $4,467 $53,201 Less: Checks Outstanding $20,758 Balance Per Ledger, 12/31 $32,443 According to the client’s accounting records, checks totaling $31,482 were issued between January 1 and January 14 of the following year. You have obtained a cutoff bank statement dated January 14 containing paid checks amounting to $50,440. Of the checks outstanding at December 31, checks totaling $3,600 were not returned in the cutoff statement, and of those issued per the accounting records in January, checks totaling $8,200 were not returned. Prepare a working paper comparing (1) the total of all checks returned by the bank or still outstanding with (2) the total per the client’s records of checks…arrow_forward
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