Question

Bank Reconciliation In-Class Team Case.

You received the client prepared bank reconciliation presented below and are auditing Simply Soups Inc’s cash; control risk over cash is assessed at the maximum level. For each item select the one or more procedures she could perform to gather evidence in support of it. Note that since many of the procedures are redundant with one another, they would not all necessarily be included in one particular audit program. For purposes of this problem you may assume the following:

Information provided by the bank is correct.

The client has only this one bank account.

The bank issues credit memos (which increase cash) and debit memos (which decrease cash) for transactions other than ordinary deposits and disbursements.

Of the reconciling items, only Check # 517 was not returned with the cutoff statement (the others items cleared in a reasonable period of time).

Bank Reconciliation American NorthWest Bank (relates to Simply Soups, Inc.) Milwaukee December 31, 20X2
1 (select 3 procedures)	Balance per bank		$121,987.17
2 (select 4 procedures	Deposits in transit                12/30                12/31	$121,200.00 31,600.23	152,800.23
3 (select 4 procedures)	Outstanding checks                517                  2455                  2456                  2457                  2458                  2459                  2460	$78,212.30 7,911.15 200.00 23.54 42,345.35 2,375.23 600.00	(131,667.57)
4 (select 4 procedures)	Error: Check 2444 for $2,300 was erroneously charged by bank for $3,200 on 12/23/X2; $900 credit received on 1/4/X3		900.00
5 (select 1 procedure)	Balance per books		$144.019.83

Procedures

Trace to cash receipts journal.

Trace to cash disbursements journal.

Compare to 12/31/X2 general ledger.

Confirm directly with bank on standard form

Determine item and amount are on 12/31/X2 bank statement.

Compare to 1/10/X3 cutoff statement.

Use cutoff statement to determine that no relevant items have been omitted from bank reconciliation.

Inspect bank issued credit memo.

Inspect bank issued debit memo.

Inspect bank issued deposit receipt.

Inspect supporting documents for reconciling item not appearing on cutoff statement.

Answer 1