You can use the computer based Electronic Workpapers on the textbook website to prepare the schedule of interbank transfers required in this problem. EverReady Corporation is in the home building and repair business. Construction business has been in a slump and the company has experienced financial difficulty over the past two years. Part of the problem lies in the company’s desire to avoid laying off its skilled crews of bricklayers and cabinetmakers. Meeting the payroll has been a problem. The auditors are engaged to audit the 2014 financial statements. Knowing of Ever Ready’s financial difficulty and its business policy, the auditors decided to prepare a schedule of interbank transfers covering the 10 days before and after December 31, which is the company’s balance sheet date. They obtained the information for everything except the dates of deposit and payment in the bank statements (disbursing date per bank and receiving date per bank). The auditors learned that EverReady always transferred money to the payroll account at 1st National Bank from the general account at 1st National Bank. This transfer enabled the bank to clear the payroll checks without delay. The only bank accounts in the EverReady financial statements are the two at 1st National Bank. Next, the auditors obtained the December 2014 and January 2015 bank statements for the general and payroll accounts at 1st National Bank. They recorded the bank disbursement and receipt dates in the schedule of interbank transfers. For each transfer, these dates are identical because the accounts are in the same bank. An alert auditor noticed that the 1st National Bank general account bank statement also contains deposits received from Citizen National Bank and canceled check 1799 dated January 5 payable to Citizen National Bank. This check cleared the 1st National Bank account on January 8 and was marked “transfer of funds.” This led to the auditors’ decision to inquire about this of EverReady’s chief financial officer.

Asked about the Citizen National Bank transactions, EverReady’s chief financial officer readily admitted the existence of an off books bank account. He explained that it was used for financing transactions in keeping with normal practice in the construction industry. He gave the auditors the December and January bank statements for the account at Citizen National Bank. In it, the auditors found the following:

When asked about the Chase Bank transactions, EverReady’s chief financial officer admitted the existence of another off books bank account, which he said was the personal account of the principal stockholder. He explained that the stockholder often used it to finance EverReady’s operations. He gave the auditors the December and January bank statements for this account at Chase Bank; in it, the auditors found the following:

Required:
a. Complete the Schedule of Interbank Transfers by entering the new information.
b. What is the actual cash balance for the three bank accounts combined, considering only the amounts given in this case information as of December 31, 2014 ( before any of the December 31 payroll checks are cashed by employees)? As of January 8, 2015 (before any of the January 8 payroll checks are cashed by employees)?

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Citizen National Bank Amount Payable to 1st National Chase Banlk 1st National Chase Banlk 1st National Dated 23-Dec 28-Dec 30-Dec 4-Jan 8-Jan Cleared Bank Check 4050 4051 4052 4053 4054 $10,000 12,000 12,000 14,000 20,000 29-Dec 31-Dec 05Jan 07-Jan 13-Jan Deposits Received from Amount Date Chase Bank Chase Bank 1st National Chase Bank $11,000 15,000 10,000 12,000 22-Dec 30-Dec 05-Jan 07-Jan Chase Bank Payments Check # 2220 2221 Payable to Citizen National Bank Citizen National Bank Citizen National Bank Amount 11,000 15,000 12,000 Dated 22-Dec 30-Dec 7-Jan Cleared Bank 28-Dec 05-Jan 12-Jan Deposits Amount Dated Received from Citizen National Bank Citizen National Bank 12,000 14,000 28-Dec 04-Jan