Background InformationNote the following:

• Acme Corporation is a publicly listed company
• ACME's Fiscalyear 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