Your firm is the auditor of Thai Textiles Ltd and you are auditing the financial statements for the year ended 30 June 2015. The company has a turnover of \($2.5\) million and a profit before tax of \($150,000\) . The company has supplied you with the following bank reconciliation at year-end. You have entered the ‘date cleared’ on the bank statement (the date on which the cheques and deposits appeared on July's bank statement).

Notes

• ‘CJ date’ is the date on which the transaction was entered into the cash journal.

• Type of transaction: ARL (accounts receivable receipt); CS (receipt from cash sales); APL

(accounts payable payment); CP (cheque payment [for other expenses]).

• All cheques for accounts payable payments are written out at the end of the month.

Required

a. List the matters that cause you concern on the client's bank reconciliation. Describe the investigations that you will carry out on these items.

b. Explain what adjustments to the financial statements would be required from (a).

Transcribed Image Text:

Balance per bank statement at 30 June 2015 Add: deposits not credited $ $ (9 865) C date Type Date cleared 30 June ARL 4 July 11 364 24 June CS 4 July 653 27 June CS 5 July 235 28 June CS 6 July 315 29 June CS 7 July 426 30 June CS 8 July 714 30 June CS 11 July 362 14 069 Less: uncleared cheques C date Cheque no. Type Date cleared 29 June 2163 CP 4 July 1216 30 June 2164 APL 18 July 10 312 30 June 2165 APL 19 July 11 264 30 June 2166 APL 18 July 9732 30 June 2167 APL 20 July 15 311 30 June 2168 APL 21 July 8 671 30 June 2169 APL 19 July 12 869 30 June 2170 APL 21 July 9 342 30 June 2171 CP 4 July 964 (79 681) Balance per cash journal at 30 June 2015 (75 477)