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 February and $24,801 for March. 4. A check for $1,280cleared the bank but had not been recorded in the cash disbursements journal. It was for an acquisition of inventory. Tampa Supply uses the periodic-inventory method. 5. A check for $667was charged to Tampa Supply but had been written on a different company's bank account. 6. The bank charged TampaSupply's account for a nonsufficient funds check totaling $2,071. The credit manager concluded that the customer intentionally closed its account and the owner left the city. The check was turned over to a collection agency. 7. A note for $4,000,plus interest, was paid directly to the bank under an agreement signed four months ago. The note payable was recorded at $4,000 on Tampa Supply's books. a. Prepare a bank reconciliation that shows both the unadjusted and adjusted balance per books. b. Prepare all adjusting entries. c. What audit procedures would you use to verify each item in the bank reconciliation?
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 February and $24,801 for March. 4. A check for $1,280cleared the bank but had not been recorded in the cash disbursements journal. It was for an acquisition of inventory. Tampa Supply uses the periodic-inventory method. 5. A check for $667was charged to Tampa Supply but had been written on a different company's bank account. 6. The bank charged TampaSupply's account for a nonsufficient funds check totaling $2,071. The credit manager concluded that the customer intentionally closed its account and the owner left the city. The check was turned over to a collection agency. 7. A note for $4,000,plus interest, was paid directly to the bank under an agreement signed four months ago. The note payable was recorded at $4,000 on Tampa Supply's books. a. Prepare a bank reconciliation that shows both the unadjusted and adjusted balance per books. b. Prepare all adjusting entries. c. What audit procedures would you use to verify each item in the bank reconciliation?
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
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Question
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 February and $24,801 for March. |
4.
|
A check for $1,280cleared the bank but had not been recorded in the cash disbursements journal. It was for an acquisition of inventory. Tampa Supply uses the periodic-inventory method. |
5.
|
A check for $667was charged to Tampa Supply but had been written on a different company's bank account. |
6.
|
The bank charged TampaSupply's account for a nonsufficient funds check totaling $2,071. The credit manager concluded that the customer intentionally closed its account and the owner left the city. The check was turned over to a collection agency. |
7.
|
A note for $4,000,plus interest, was paid directly to the bank under an agreement signed four months ago. The note payable was recorded at $4,000 on Tampa Supply's books. |
a.
|
Prepare a bank reconciliation that shows both the unadjusted and adjusted balance per books.
|
b.
|
Prepare all
|
c.
|
What
|
d.
|
What is the cash balance that should appear on the March31, 2019, financial statements? |
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