Acct 422 Homework 6 Solutions

ACCT 422 Homework 6 Solutions

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ACCT 422 Homework 6 Solutions

1. You are auditing general cash for a company for the fiscal year ended September 30, 2014. The client has not prepared the September 30 bank reconciliation,. After a brief discussion with the owner, you agree to prepare the reconciliation with the assistance from one the company’s clerks. You obtain the following information: (30 points)

| General Ledger | Bank Statement |

Beginning balance 9/1/14 | $15,000 | $17,800 |

Deposits | | $31,051 |

Cash receipts journal | $33,330 | |

Check cleared | | (30,309) |

Cash disbursements journal | ($27,101) | |

September bank service charge | | (150) |

Note paid directly | | (8,000) |

NSF check | | (950) |

Ending balance 9/30/14 | $21,229 | $9,442 |

August 30 Bank Reconciliation

Information in General ledger and bank statement

Balance per bank | $17,800 |

Deposit in transit | 1,200 |

Outstanding check | 4,000 |

Balance per book | $15,000 |

Additional information obtained is as follows:

1. Check clearing that were outstanding on August 30 total $3,820

2. Check clearing that were recorded in the September disbursement journal total $25,239

3. A check for $500 cleared the bank but had not been recorded in the cash disbursements journal. It was for an acquisition for inventory. The company uses the periodic-inventory method.

4. A check for $750 was charged to the company but had been written on a different company’s bank account.

5. Deposit included $1,200 from August and $29,851 for September.

6. The bank charged the company account for nonsufficient check totaling $950. The credit manager concluded that customer intentionally closed its account and the owner left the city. The check was turned over to collection agency.

7. A note for $7,500, plus interest was paid directly to the bank under an agreement singed five month ago....