$23-19($Objective $23-3)$ You are auditing general cash for the

Pittsburgh Supply Company

for the fiscal year ended July $31,2016.$ The client has not

prepared the July $31$ bank

reconciliation. After a brief discussion with the owner, you agree

to prepare the reconciliation,

with assistance from one of Pittsburgh Supply$$s clerks. You obtain

the following

information:

General ledger Bank Statement

Beginning balance $7/1/16$ $ $6,400$ $ $8,378$

Deposits $25,474$

Cash receipts journal $26,874$

Checks cleared $(25,307)$

Cash disbursements journal $(23,171)$

July bank service charge $(107)$

Note paid directly $(6,400)$

NSF check $(516)$

Ending balance $7/31/16$ $ $10,103$ $ $1,522$

June $30$ Bank reconciliation

Information in General ledger and Bank Statement

Balance per bank $$8,378$

Deposits in transit $600$

Outstanding checks $2,578$

Balance per books $$6,400$

Additional information obtained is as follows:

$1.$ Checks clearing that were outstanding on June $30$ totaled

$$2,411.$

$2.$ Checks clearing that were recorded in the July disbursements

journal totaled $$21,120.$

$3.$ A check for $$1,130$ cleared the bank but had not been recorded in

the cash disbursements

journal. It was for an acquisition of inventory. Pittsburgh Supply

uses the

periodic$-$inventory method.

$4.$ A check for $$646$ was charged to Pittsburgh Supply but had been

written on a different

company$$s bank account.

$5.$ Deposits included $$600$ from June and $$24,874$ for July$\mathrm{.}6.$ The bank charged Pittsburgh Supply$$s account for a

nonsufficient funds check totaling

$$516.$ The credit manager concluded that the customer intentionally

closed its

account and the owner left the city. The check was turned over to a

collection agency.

$7.$ A note for $$6,000,$ plus interest, was paid directly to the bank

under an agreement signed

four months ago. The note payable was recorded at $$6,000$ on

Pittsburgh Supply$$s books.

a$.$ Prepare a bank reconciliation that shows both the unadjusted and

adjusted balance

per books.

b$.$ Prepare all adjusting entries.

c$.$ What audit procedures would you use to verify each item in the

bank reconciliation?

d$.$ What is the cash balance that should appear on the July $31,$

$2016,$ financial statements?