Question

During the audit of Sunset Building Supply, you are given the following year-end bank reconciliation prepared by the client: SUNSET BUILDING SUPPLY Bank Reconciliation December 31 Balance per 12/31 bank statement Add: Deposits in transit $ 49,144 4,508 $ 53,652 20,932 $ 32,720 Less: Checks outstanding Balance per ledger, 12/31 According to the client's accounting records, checks totaling $31,752 were issued between January 1 and January 14 of the following year. You have obtained a cutoff bank statement dated January 14 containing paid checks amounting to $50,872. Of the checks outstanding at December 31, checks totaling $3,631 were not returned in the cutoff statement, and of those issued per the accounting records in January, checks totaling $8,269 were not returned. Required: Prepare a working paper comparing (1) the total of all checks returned by the bank or still outstanding with (2) the total per the client's records of checks outstanding at December 31 plus checks issued from January 1–14.

Answer 1

Balance as per 12/31 bank statement	49,144
Add:	Deposit in transit	4,508
			53,652
Less:	Check outstanding	20,932
Balance as per ledger on 12/31	32,720
Add:	Check outstanding	31,752
Less:	Dec'31 Check not returned	8,269
Less:	Jan'31 Check not returned	3,631
Balance as per 1/31 bank statement	52,572

Outstanding over disbursement as per client - $1812