Background Information Note the following:

• Acme Corporation is a publicly listed company

• ACMEs Fiscal year end is December 31

• In addition to the cash account being reconcile here; ACME has a separate Revolving Credit account.

  This is a revolving credit facility where interest is accrued on the average balance outstanding during the month. The interest amount is required to be paid on a monthly basis. The correct is amount calculated and taken from the account automatically by the bank.

• The facility has an annual interest rate of 4%

• Management has set-out in the Financial Statements that the average balance outstanding in this

  revolving credit facility is normally at around $ 150,000.

• The Audit Committee has also informed the Partner that the CRA audited ACME in the previous year

  and levied a penalty of $50,000 and has informed the Board that they plan continue their audit in the new year.

  Required

  Part 1

1. a) From the information provided in EXHIBIT A, perform and document a Bank Reconciliation. - 20 marks

2. b) From the Background info. provided above, identify potential errors and disclosure requirements - 5 marks

Part 2

1. a) Identify the financial assertions relating to the Cash account addressed by the Bank Reconciliation and explain how. 5 marks

2. b) Identify what type of activity the Bank Reconciliation is. 5 marks

3. c) Identify the 6 possible characteristics (of the activity above) and which apply to the Bank Rec. 5 marks

BONUS How would the Auditor test the identified characteristics. 4 marks

EXHIBIT A

ABC Bank Statement Exerpt for Acme Corporartion Bank Account
for December 201X
Date	Description	Cash Out	Cash In	Balance
January 7, 2021	Cheque 1415	$ 2,500.00		$ 103,390.00
January 6, 2021	Cheque 1416	$ 3,000.00		$ 105,890.00
January 5, 2021	Cheque 1414	$ 2,000.00		$ 108,890.00
January 4, 2021				$ 110,890.00
January 3, 2021	EFT	$ 7,500.00		$ 110,890.00
January 2, 2021	EFT	$ 6,000.00		$ 118,390.00
January 1, 2021	Foreign Wire		$ 5,250.00	$ 124,390.00
December 31, 2020	Loan Interest - Dec.	$ 1,500.00		$ 119,140.00
December 30, 2020	Bank Charges - Dec.	$ 250.00		$ 120,640.00
December 29, 2020	Returned Cheque 1412		$ 500.00	$ 120,890.00
December 28, 2020	Cheque 1413	$ 1,500.00		$ 120,390.00
December 27, 2020	CRA Appropriation	$ 50,000.00		$ 121,890.00
December 26, 2020	Cheque 1412	$ 500.00		$ 171,890.00
December 25, 2020				$ 172,390.00
December 24, 2020				$ 172,390.00
		$ 74,750.00	$ 5,750.00	$ 172,390.00
Acme Corporation
General Ledger Cash Account Excerpt
Date	Transaction Detail	Type	Debit	Credit	GL Acct. Balance
January 7, 2021					$ 103,390.00
January 6, 2021	Payment to Supplier #11	Cheque 1418			$ 103,390.00
January 5, 2021	Payment to Supplier #12	Cheque 1417			$ 103,390.00
January 4, 2021	Loan Interest - Re: Dec.	Taken by Bank		$ 1,500.00	$ 103,390.00
January 3, 2021	CRA Appropriation	Taken by CRA		$ 50,000.00	$ 104,890.00
January 2, 2021	Returned Cheque (Supplier Account Closed)	Cheque 1412	$ 500.00		$ 154,890.00
January 1, 2021	Bank Charges - Re: Dec.	Taken by Bank		$ 250.00	$ 154,390.00
December 31, 2020	Payment to Supplier #4	EFT		$ 6,000.00	$ 154,640.00
December 30, 2020	Payment to Supplier #5	Cheque 1416		$ 3,000.00	$ 160,640.00
December 29, 2020	Payment to Supplier #1	EFT		$ 7,500.00	$ 163,640.00
December 28, 2020	Payment to Supplier #2	Cheque 1415		$ 2,500.00	$ 171,140.00
December 27, 2020	Receipt from Customer B	Foreign Wire	$ 5,250.00		$ 173,640.00
December 26, 2020	Receipt from Customer A	Cheque 1414		$ 2,000.00	$ 168,390.00
December 25, 2020	Payment to Supplier #2	Cheque 1413		$ 1,500.00	$ 170,390.00
December 24, 2020	Payment to Supplier #3	Cheque 1412		$ 500.00	$ 171,890.00
			$ 5,750.00	$ 74,750.00	$ 172,390.00