Regional Transport Company is a large branch of a national company. Regional maintains its own bank account. Cash is periodically transferred to the central head office account in Montreal. On the branch account€™s records, bank transfers are recorded as a debit to the home office clearing account and a credit to the branch bank account. Simi larly, the home office account is recorded as a debit to the central bank account and a credit to the branch office clearing account. Gordon Light is the accountant on staff for both the home office and the branch bank accounts. Because he also reconciles the bank account, the senior auditor, Cindy Marintette, is concerned about this internal control weakness.
As a part of the year-end audit of bank transfers, Cindy asks you to schedule the transfers for the last few days in 2012 and the first few days of 2013. You prepare the following list:

REQUIRED
a. State the appropriate audit procedures you should perform in verifying each bank transfer.
b. Prepare any adjusting entries required in the home office records.
c. Prepare any adjusting entries required in the branch bank records.
d. State how each bank transfer should be included in the December 31, 2012, bank reconciliation for the home office account after your adjustments in part (b).
e. State how each bank transfer should be included in the December 31, 2012, bank reconciliation of the branch bank account after your adjustments in part (c).

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Date Recorded in the Home Office Cash Receipts Journal 12-27-12 12-28-12 01-02-13 12-26-12 01-02-13 01-07-13 01-04-13 Date Recorded in the Branch Office Cash Disbursements Journal 12-29-12 Date Deposited in the Home Office Bank Account Amount of Date Cleared the Branch Transfer $12,000 26,000 14,000 11,000 15,000 28,000 37,000 12-26-12 12-28-12 12-28-12 12-28-12 12-28-12 12-28-12 01-03-13 Bank Account 12-27-12 12-29-12 12-29-12 01-03-13 12-31-12 01-03-13 01-05-13 01-02-13 12-30-12 12-26-12 01-02-13 01-05-13 01-06-13