The Cairo Wheat Supply Company, a client of yours, informs you that they recently lost several...

 

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The Cairo Wheat Supply Company, a client of yours, informs you that they recently lost several employees in their accounting department. They are strug- gling to prepare for their yearly audit, so they have asked you to assist with their bank reconciliation for the year ended December 31, 2010. You obtain the following financial information from the company: General Ledger Bank Statement $ 8,178 $ 10,123 30,012 Beginning balance 12/1/10 Deposits Cash receipts journal Checks cleared Cash disbursements journal July bank service charge Note paid directly 32,156 (17,456) (18.478) (30) (20,500) (125) $ 20,024 NSF check Ending balance 12/31/10 $ 21,856 November 30 Bank Reconciliation Information in General Ledger and Bank Statement Balance per bank Deposits in transit Outstanding checks Balance per books $10,123 1,300 (3.245) $8,178 You also obtain some additional information, as follows: 1. Checks clearing that were outstanding as of November 30 totaled $3.000 2 Checks clearing that were recorded in the December disbursements journal toraled $13,935. A check for $500 just cleared the bank but has not yet been recorded in the cash dishursements journal. You learn that the expense is for several bushels of wheat recently purchased by the company. in December, a check for $405 was mistakenly charged to Cairo Wheat Sunpl hut as astually intended for a different company's bank account. The bank has to credit Cairo Wheat Supply for the difference. Cicus in December consist of $1.300 from November and $28,712 from Decemnber. agreed 6. Cairo Wheat Company signed a temporary loan agreement with the bank earlier in the year, a payment for which is due in December in the amount of $2,500. This amount has not yet been recorded on the books. 7. An expected payment from a customer in the amount of $125 did not clear the bank. The credit manager investigated the matter and discovered that the account was closed after its owner died. The amount is not expected to be paid from the estate. a. Prepare a bank reconciliation that shows both the unadjusted and adjusted balance per books. b. Prepare all adjusting entries. 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 December 31, 2010, financial statements? The Cairo Wheat Supply Company, a client of yours, informs you that they recently lost several employees in their accounting department. They are strug- gling to prepare for their yearly audit, so they have asked you to assist with their bank reconciliation for the year ended December 31, 2010. You obtain the following financial information from the company: General Ledger Bank Statement $ 8,178 $ 10,123 30,012 Beginning balance 12/1/10 Deposits Cash receipts journal Checks cleared Cash disbursements journal July bank service charge Note paid directly 32,156 (17,456) (18.478) (30) (20,500) (125) $ 20,024 NSF check Ending balance 12/31/10 $ 21,856 November 30 Bank Reconciliation Information in General Ledger and Bank Statement Balance per bank Deposits in transit Outstanding checks Balance per books $10,123 1,300 (3.245) $8,178 You also obtain some additional information, as follows: 1. Checks clearing that were outstanding as of November 30 totaled $3.000 2 Checks clearing that were recorded in the December disbursements journal toraled $13,935. A check for $500 just cleared the bank but has not yet been recorded in the cash dishursements journal. You learn that the expense is for several bushels of wheat recently purchased by the company. in December, a check for $405 was mistakenly charged to Cairo Wheat Sunpl hut as astually intended for a different company's bank account. The bank has to credit Cairo Wheat Supply for the difference. Cicus in December consist of $1.300 from November and $28,712 from Decemnber. agreed 6. Cairo Wheat Company signed a temporary loan agreement with the bank earlier in the year, a payment for which is due in December in the amount of $2,500. This amount has not yet been recorded on the books. 7. An expected payment from a customer in the amount of $125 did not clear the bank. The credit manager investigated the matter and discovered that the account was closed after its owner died. The amount is not expected to be paid from the estate. a. Prepare a bank reconciliation that shows both the unadjusted and adjusted balance per books. b. Prepare all adjusting entries. 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 December 31, 2010, financial statements?

Answer rating: 100% (QA)

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