Required:A. Prepare a working paper comparing (1) the total of all checks returned by the bank or still outstanding with (2) the total per clients records of checks outstanding at December 31 plus checks issued from January 1-14.B. Suggest a four possible explanations for the situation disclosed in the working paper. State what action you would take in each case, including any adjustments entry would you propose. During the audit of Evolution Building Supply, you are given thefollowing year-end bank reconciliation prepared by the client:9-5.Evolution Building SupplyBank ReconciliationDecember 31P 97,4688,934P106,40241,516P 64,886per 12/31Add: Deposits in transitBalanceLess: Checks outstandingBalance per ledger, 12/31According to the client's accounting records, checks totaling P62,964 wereissued between January 1 and January 14 of the following year. You haveobtained a cutoff bank statement dated January 14 containing paid checks.amounting to P100,880. Of the checks outstanding at December 31,checks totaling P7,200 were not returned in the cutoff statement, and ofthose issued per the accounting records in January, checks totalingP16,400 were not returned.REQUIRED:a) Prepare a working paper comparing (1) the total of all checks returnedby the bank or still outstanding with (2) the total per client's records ofchecks outstanding at December 31 plus checks issued from January1-14.b) Suggest four possible explanations for the situation disclosed in yourworking paper.including any adjusting entry youState what action you would take in each case,wouldpropose.

Assurance Services is Associate in Nursing engagement accomplished via methodology of suggests that…

Answered: D-5. During the audit of Evolution…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Required:

A. Prepare a working paper comparing (1) the total of all checks returned by the bank or still outstanding with (2) the total per clients records of checks outstanding at December 31 plus checks issued from January 1-14.

B. Suggest a four possible explanations for the situation disclosed in the working paper. State what action you would take in each case, including any adjustments entry would you propose.

During the audit of Evolution Building Supply, you are given the
following year-end bank reconciliation prepared by the client:
9-5.
Evolution Building Supply
Bank Reconciliation
December 31
P 97,468
8,934
P106,402
41,516
P 64,886
per 12/31
Add: Deposits in transit
Balance
Less: Checks outstanding
Balance per ledger, 12/31
According to the client's accounting records, checks totaling P62,964 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 P100,880. Of the checks outstanding at December 31,
checks totaling P7,200 were not returned in the cutoff statement, and of
those issued per the accounting records in January, checks totaling
P16,400 were not returned.
REQUIRED:
a) Prepare a working paper comparing (1) the total of all checks returned
by the bank or still outstanding with (2) the total per client's records of
checks outstanding at December 31 plus checks issued from January
1-14.
b) Suggest four possible explanations for the situation disclosed in your
working paper.
including any adjusting entry you
State what action you would take in each case,
would
propose.

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