During the audit of ABC Company you became suspicious of management and their cash management methods and decided to test the accuracy of the outstanding cheques shown on the year-end bank reconciliation. Since this is a great area to hide any kiting, lapping and other embezzlement opportunities, you gathered the necessary information to prepare the bank reconciliation and recalculate the outstanding cheques amount to verify the one on the year-end reconciliation (the company bank reconciliation shows outstanding cheques as $392,548). Use the following information to prepare the bank reconciliation and determine what the outstanding cheques amount should be. (10 marks)

- NSF cheque from customer $93,580

- Mortgage payment on building taken directly from bank account $26,779

- Outstanding deposits $768,650

- EFT from customer $750,000

- G/L bank balance - Dec. 31, 2019 $ 439,563

- Error on cheque # 94531, cheque issued and posted correctly as $63,200 but debited by the bank incorrectly as $36,200.

- Bank statement balance at Dec. 31, 2019 $679,422

- Bank service charges $ 116

-Interest earned on short-term investments and deposited directly in the account $ 436

If there is a difference in the O/S cheques according to your bank reconciliation, what is the difference?

Question 23 options:

Outstanding cheques $243,548, Difference $ 75,000

Outstanding cheques $392,548, Difference $0

Outstanding cheques $351,548, Difference $ 41,000

Outstanding cheques $323,558, Difference $ 63,248