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	$	49,064
Add: Deposits in transit		4,500
	$	53,564
Less: Checks outstanding		20,897
Balance per ledger, 12/31	$	32,667

According to the client’s accounting records, checks totaling $31,700 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 $50,789. Of the checks outstanding at December 31, checks totaling $3,626 were not returned in the cutoff statement, and of those issued per the accounting records in January, checks totaling $8,258 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

Solution Sunset building Suppleys Comparison of checks and Disbursements December 31 Checks relwoned Returned in cutoff statement S0789 Outstanding checks on lly (8258 +3626) 1884 | 63-673 Disbursments per Client recoods Outstanding checks on 12/31 - 20897 Essued bereken Hi and ibu 37-700 52597 Cress of cheelse oefwrned ©) outsianding Over disbursements per client $10076 records