Question

GENERAL COMPANY Bank Reconciliation: 1st National Bank September 30, 2018 1 Balance per bank 28,375 2 Deposits in transit 29-Sep 4,500 30-Sep 1,525 6,025 34,400 3 Outstanding Check 31-Aug 2,200 26-Sep 675 27-Sep 850 29-Sep 2,500 30-Sep 7,225 (13,450) 20,950 4 Customer note collected by the bank -3,000 5 Error: Check #1282, written on 26-Sep for 270 was erroneously charged by the bank as $720; bank was notified 2-Oct. 450 6 Balance per books 18,400 Assume these facts: • The client prepared the bank reconciliation on 2-Oct. • The bank reconciliation is mathematically accurate. • On 11-Oct., the auditor received a cutoff bank statement dated 7-Oct. • The 30-Sep deposit in transit; the outstanding checks 1281, 1285, 1289, and 1292; and the correction of the bank error regarding check 1282 appeared on the cutoff bank statement. Required: For each of the six steps of the above bank reconciliation, select one or more of the following procedures A-J that you believe the auditor should perform to obtain evidence about the item. These procedures may be selected once, more than once, or not at all. Be prepared to explain the reasons for your choices. 1. Balance Per Book XXX XXX XXX 2. Deposits in Transit 3. Outstanding Checks 4. Customer Note XXX XXX XXX XXX 5. Error XXX XXX XXX 6. Balance per Book XXX XXX XXX XXX A. Trace to cash receipts journal. B. Trace to cash disbursements journal. C. Compare to the 30-Sep general ledger. D. Confirm directly with the bank. E. Inspect bank credit memo. F. Inspect bank debit memo. G. Ascertain reason for unusual delay, if any. H. Inspect supporting documents for reconciling items that do not appear on the cutoff bank statement. I. Trace items on the bank reconciliation to the cutoff bank statement. J. Trace items on the cutoff bank statement to the bank reconciliation.

Answer 1