Suggest four possible explanations for the situation disclosed in your working paper. State what action you would take in each case, including any adjusting entry you would propose.
During the audit of Sunset Building Supply, you are given the following year-end bank reconciliation prepared by the client:
Balance per 12/31 bank statment: $48,734
Add: Deposits in transit: $4,467
$53,201
Less: Checks Outstanding $20,758
Balance Per Ledger, 12/31 $32,443
According to the client’s accounting records, checks totaling $31,482 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 $50,440. Of the checks outstanding at December 31, checks totaling $3,600 were not returned in the cutoff statement, and of those issued per the accounting records in January, checks totaling $8,200 were not returned.
Suggest four possible explanations for the situation disclosed in your working paper. State what action you would take in each case, including any
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