You are auditing general cash for Pitt Supply Company for the financial year ended 30 June 20X9. The client has not prepared the 30 June bank reconciliation. After a brief discussion with the owner, you agree to prepare the reconciliation with assistance from one of Pitt Supply's clerks. You obtain the following information:

May 31 bank reconciliation
Information in general ledger and bank statement
Balance per bank.....................................$5 753
Deposits not yet credited...............................600
Unpresented cheques.................................1 742
Balance per books 31/5/X9...........................4 611
Additional information obtained is as follows:
1. Cheques presented that were outstanding on 30 June totalled $1692.
2. Cheques presented that were recorded in the June payments journal totalled $20 467.
3. A cheque for $1060 cleared the bank but had not been recorded in the cash payments journal. It was for an acquisition of inventory. Pitt Supply uses the periodic inventory method.
4. A cheque for $396 was charged to Pitt Supply but had been written on a different company's bank account.
5. Deposits included $600 from May and $24 456 for June.
6. The bank charged Pitt Supply's account for a dishonoured cheque totalling $311. The credit manager concluded that the customer intentionally closed its account and the owner left the city. The cheque was turned over to a collection agency.
7. A loan repayment for $5800, plus interest, was paid direct to the bank under an agreement signed four months ago.
REQUIRED
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?
d. What is the cash balance that should appear on the 30 June 20X9 financial statements?

Transcribed Image Text:

General ledger Bank statement $4611 $5753 25 056 Beginning balance 1/6/x9 Deposits Cash receipts journal Cheques cleared Cash payments journal July bank service charge Loan paid directly Dishonoured cheque Ending balance 30/6x9 25 456 (23 615) (21 811) (87) (6 100) (311) $696 $8 256