Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
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Chapter 23, Problem 20DQP
(a).
To determine
Determine bank reconciliation of both adjusted and unadjusted balance as per books
(b).
To determine
Record all the
(c).
To determine
Determine the
(d).
To determine
Determine the cash balance on 31st July in financial statement.
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You are auditing general cash for the Tampa Supply Company for the fiscal year ended March 31, 2019. The client has not prepared the March 31 bank reconciliation. After a brief discussion with the owner, you agree to prepare the reconciliation, with assistance from one of Tampa Supply's clerks.
General Ledger
Bank Statement
Beginning balance 3/1/19
7,637
9,513
Deposits
25,336
Cash receipts journal
26,512
Checks cleared
(25,629)
Cash disbursements journal
(23,824)
March bank service charge
(75)
Note paid directly
(4,500)
NSF check
(2,071)
Ending balance 3/31/19
10,325
2,574
Balance per bank
9,513
Deposits in transit
620
Outstanding checks
2,496
Balance per books
7,637
1.
Checks clearing that were outstanding on February 28 totaled $2,477.
2.
Checks clearing that were recorded in the Marchdisbursements journal totaled $21,205.
3.
Deposits included $620 from…
You are conducting an audit of the MART CORPORATION for the year ended December 31, 2018. The internal control procedures surrounding cash transactions were not adequate. Jane Quipit, the bookkeeper-cashier handles cash receipts, maintains accounting records and prepares the monthly reconciliations of the bank account. She prepared the following reconciliation at the end of the year:
Balance per bank statement P 315,000
Add : Deposit in transit P 157,725
Note collected by bank 13,500 171,225
Balance P 486,225
Less : Outstanding checks 222,075
Balance per general ledger P 264,150
In the process of your audit, you gathered the following:
At December 31, 2018, the bank statement and the general ledger showed balances of P315,000 and P264,150 respectively.
The cut off bank statement showed a bank charge on January 02, 2019 for P35,250 representing a correction of an erroneous bank credit.
Included in the list of outstanding checks were the following:
A check payable to a…
You 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…
Chapter 23 Solutions
Auditing And Assurance Services
Ch. 23 - Explain the relationships among the initial...Ch. 23 - Prob. 2RQCh. 23 - Prob. 3RQCh. 23 - Prob. 4RQCh. 23 - Prob. 5RQCh. 23 - Prob. 6RQCh. 23 - Prob. 7RQCh. 23 - Prob. 8RQCh. 23 - Prob. 9RQCh. 23 - Prob. 10RQ
Ch. 23 - Prob. 11RQCh. 23 - Prob. 12RQCh. 23 - Prob. 13RQCh. 23 - Prob. 14RQCh. 23 - Prob. 15.1MCQCh. 23 - Prob. 15.2MCQCh. 23 - Prob. 15.3MCQCh. 23 - Prob. 16.1MCQCh. 23 - Prob. 16.2MCQCh. 23 - Prob. 16.3MCQCh. 23 - Prob. 17.1MCQCh. 23 - Prob. 17.2MCQCh. 23 - Prob. 17.3MCQCh. 23 - Prob. 18DQPCh. 23 - Prob. 19DQPCh. 23 - Prob. 20DQPCh. 23 - Prob. 21DQPCh. 23 - Prob. 22DQPCh. 23 - You are doing the first-year audit of Sherman...Ch. 23 - Prob. 24DQPCh. 23 - Prob. 25DQPCh. 23 - The amount of subjectivity involved in...
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- Complex Balance Sheet Presented below is the unaudited balance sheet as of December 31, 2019, prepared by Zeus Manufacturing Corporations bookkeeper. Your company has been engaged to perform an audit, during which you discover the following information: 1. Checks totaling 14,000 in payment of accounts payable were mailed on December 31, 2019, but were not recorded until 2020. Late in December 2019, the bank returned a customers 2,000 check marked NSF, but no entry was made. Cash includes 100,000 restricted for building purposes. 2. Included in accounts receivable is a 30,000 note due on December 31, 2022, from Zeuss president. 3. During 2019, Zeus purchased 500 shares of common stock of a major corporation that supplies Zeus with raw materials. Total cost of this stock was 51,300, and fair value on December 31, 2019, was 51,300. Zeus plans to hold these shares indefinitely. 4. Treasury stock was recorded at cost when Zeus purchased 200 of its own shares for 32 per share in May 2019. This amount is included in investments. 5. On December 31, 2019, Zeus borrowed 500,000 from a bank in exchange for a 10% note payable, manning December 31, 2024. Equal principal payments are due December 31 of each year beginning in 2020. This note is collateralized by a 250,000 tract of land acquired as a potential future building site, which is included in land. 6. The mortgage payable requires 50,000 principal payments, plus interest, at the end of each month. Payments were made on January 31 and February 28, 2020. The balance of this mortgage was due June 30, 2020. On March 1, 2020, prior to issuance of the audited financial statements, Zeus consummated a non-cancelable agreement with the lender to refinance this mortgage. The new terms require 100,000 annual principal payments, plus interest, on February 28 of each year, beginning in 2021. The final payment is due February 28, 2028. 7. The lawsuit liability will be paid in 2020. 8. Of the total deferred tax liability; 5,000 is considered a current liability. 9. The current income tax expense reported in Zeuss 2019 income statement was 61,200. 10. The company was authorized to issue 100,000 shares of 50 par value common stock.arrow_forwardIn conducting your audit of Black Company's cash in bank, you noted the following. Checks and charges recorded by bank in June (including a June service change of P 300), P 172,100. Service charge made by bank in May and recorded on the books in June, P 200: Total of credits to cash in a journals during June, P 198,020, Customer's NSF check returned in May and redeposited in June (no entry made on books in either May or June). P 2.500; Outstanding checks at June P80,800 and deposit in transit in June. P 6,000. What were the total outstanding checks at the beginning of June?arrow_forwardIn preparing the June 30th bank reconciliation, the accountant identified the following items: Company's checkbook balance $23,000, Outstanding Checks $550, Interest earned on the checking account $100, Customer's NSF (non sufficient funds) check returned by the bank $1,000. In the process of preparing the reconciliation, the accountant discovered an error in recording a customer's check; the amount was incorrectly recorded on the books as a cash receipt of $600, while the bank correctly recorded the amount as $650. What is the company's adjusted cash balance on June 30th? A. $21,700 B. $22,150 C. $22,250 D. $22,200arrow_forward
- 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.arrow_forwardThe auditor has gathered the following information to test the accuracy of the one prepared by the controller. In particular, the auditor is testing the accuracy of the outstanding cheques. Use the following information to prepare the bank reconciliation and calculate what the total of the outstanding cheques should be. 1. Cash balance - March 31 $39,500 2. Outstanding Deposits $13,810 3. NSF cheque from a customer $750 4. Bank Statement Balance - March 31 $127,100 5. The bank recorded a deposit as $10,000 when the deposit was actually $1,000 6. The bank credited the company's bank account with $3,900 of interest earned 7. The bank statement showed an EFT from a customer for $16,300 8. The bank charged a service charge of $45 9. The company posted cheque #1730 as $890 when the actual amount was properly debited by the bank for $980 a) Outstanding Cheques= $73,095 b) Outstanding Cheques= $76,995 c) Outstanding Cheques=$82,095 d) Outstanding Cheques= $56,795arrow_forwardIn comparing the processed checks on the bank statement with the entries in the accounting records, it is found that check number 2889 for December's utilities was correctly written and drawn for $970 but was erroneously entered in the accounting records as $790. The journal entry to adjust the books for the bank reconciliation would include which of the following for this situation? a) $970 increase to Cash and a $790 decrease to Utility Expense. b) $180 increase to Cash and a $180 increase to Utility Expense. c) $180 decrease to Cash and a $180 increase to Utility Expense. d) $180 decrease to Cash and a $180 decrease to Utility Expense. e) $180 increase to Cash and a $120 decrease to Utility Expense.arrow_forward
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- In comparing the canceled checks on the bank statement with the entries in the accounting records, Tanner Company found that check number 4239 for May's rent was correctly written and drawn for $6,750 but was erroneously entered in the accounting records as $6,570. When preparing the May bank reconciliation, the Tanner Company should: Select one: A. Add $180 to the book balance of cash B. Deduct $180 from the bank statement balance C. Add $180 to the bank statement balance D. Deduct $180 from the book balance of casharrow_forwardUsing the following information, prepare a bank reconciliation for Young Co. for August 31, 2019, and prepare the journal entries: (a) The bank statement balance is $4,095 (b) The cash account balance is $4,205. (c) Outstanding checks amounted to $517. (d) Deposits in transit are $655. (e) The bank service charge is $45. (f) A check for $84 for supplies was recorded as $48 in the ledger. (g) NSF check for $649.00 (h) EFT collected $715.00 (i) Bank error processed a check for $53 as $35arrow_forwardThe bank statement for the checking account of Management Systems Inc. (MSI) showed a December 31, 2018, balance of $14,832.62. Information that might be useful in preparing a bank reconciliation is as follows: Outstanding checks were $1,340.55. The December 31, 2018, cash receipts of $585 were not deposited in the bank until January 2, 2019. One check written in payment of rent for $248 was correctly recorded by the bank but was recorded by MSI as a $284 disbursement. In accordance with prior authorization, the bank withdrew $470 directly from the checking account as payment on a mortgage note payable. The interest portion of that payment was $360. MSI has made no entry to record the automatic payment. Bank service charges of $16 were listed on the bank statement. A deposit of $885 was recorded by the bank on December 13, but it did not belong to MSI. The deposit should have been made to the checking account of MIS, Inc. The bank statement included a charge of $85 for an NSF check.…arrow_forward
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