Homework Help is Here – Start Your Trial Now!
Business
Accounting
D-5. During the audit of Evolution Building Supply, you are given the following year-end bank reconciliation prepared by the client: Evolution Building Supply Bank Reconciliation December 31

D-5. During the audit of Evolution Building Supply, you are given the following year-end bank reconciliation prepared by the client: Evolution Building Supply Bank Reconciliation December 31

Auditing: A Risk Based-Approach (MindTap Course List)
Auditing: A Risk Based-Approach (MindTap Course List)
11th Edition
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Chapter10: Auditing Cash, Marketable Securities, And Complex Financial Instruments
Section: Chapter Questions
Problem 21RQSC
See similar textbooks
icon
Related questions
Question
100%

Required:

A. Prepare a working paper comparing (1) the total of all checks returned by the bank or still outstanding with (2) the total per clients records of checks outstanding at December 31 plus checks issued from January 1-14.

B. Suggest a four possible explanations for the situation disclosed in the working paper. State what action you would take in each case, including any adjustments entry would you propose.

During the audit of Evolution Building Supply, you are given the following year-end bank reconciliation prepared by the client: 9-5. Evolution Building Supply Bank Reconciliation December 31 P 97,468 8,934 P106,402 41,516 P 64,886 per 12/31 Add: Deposits in transit Balance Less: Checks outstanding Balance per ledger, 12/31 According to the client's accounting records, checks totaling P62,964 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 P100,880. Of the checks outstanding at December 31, checks totaling P7,200 were not returned in the cutoff statement, and of those issued per the accounting records in January, checks totaling P16,400 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) the total per client's records of checks outstanding at December 31 plus checks issued from January 1-14. b) Suggest four possible explanations for the situation disclosed in your working paper. including any adjusting entry you State what action you would take in each case, would propose.
Transcribed Image Text:During the audit of Evolution Building Supply, you are given the following year-end bank reconciliation prepared by the client: 9-5. Evolution Building Supply Bank Reconciliation December 31 P 97,468 8,934 P106,402 41,516 P 64,886 per 12/31 Add: Deposits in transit Balance Less: Checks outstanding Balance per ledger, 12/31 According to the client's accounting records, checks totaling P62,964 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 P100,880. Of the checks outstanding at December 31, checks totaling P7,200 were not returned in the cutoff statement, and of those issued per the accounting records in January, checks totaling P16,400 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) the total per client's records of checks outstanding at December 31 plus checks issued from January 1-14. b) Suggest four possible explanations for the situation disclosed in your working paper. including any adjusting entry you State what action you would take in each case, would propose.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Audit Evidence and Documentation
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Auditing: A Risk Based-Approach (MindTap Course L…
Auditing: A Risk Based-Approach (MindTap Course L…
Accounting
ISBN:
9781337619455
Author:
Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:
Cengage Learning
Century 21 Accounting Multicolumn Journal
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:
9781337679503
Author:
Gilbertson
Publisher:
Cengage
Financial And Managerial Accounting
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
Financial Accounting
Financial Accounting
Accounting
ISBN:
9781337272124
Author:
Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:
Cengage Learning
Survey of Accounting (Accounting I)
Survey of Accounting (Accounting I)
Accounting
ISBN:
9781305961883
Author:
Carl Warren
Publisher:
Cengage Learning
College Accounting (Book Only): A Career Approach
College Accounting (Book Only): A Career Approach
Accounting
ISBN:
9781337280570
Author:
Scott, Cathy J.
Publisher:
South-Western College Pub
SEE MORE TEXTBOOKS