Bank Reconciliation and journal entries for proli footwear audit.

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Proli Footwear AJE Control - Cash December 31, 2014 AJE Number Reference Accounts/Description x = account has impact on income before taxes amount Impact on income before taxes = Account Number Debit DR/CR Credit Proli Footwear Excerpts from Operating Account Check Register (2/2) Date Check # 1/5/2015 3738 3739 3740 3741 3742 3743 3744 3745 3746 3747 3748 3749 3750 3751 3752 3753 3754 3755 3756 3757 3758 3759 3760 3761 3762 3763 3764 3765 3766 3767 1/6/2015 1/7/2015 1/9/2015 1/10/2015 1/12/2015 1/14/2015 Payee Scuff GB Leather Connecticut Propane Waterbury Trash Service Lucky Advertising Connecticut Phone-Proli Connecticut Phone-Waterbury Proli Florist Waterbury Gas Local National Bank Local National Bank Workers' Comp Insurance Agency Walton Trust Walton Electric Proli Propane Florida Phone Walton Trust Waterbury Water Proli Water Connecticut Electric-Proli Proli Insurance Agency Walton Water Payroll Transfer Proli Stock Agent: Dec dividend Proli Electric Walton Gas Company Walton Mobile Phones Proli Rental Properties, LLC (L1, L2A, L2B) Alice Fair Real Estate Associates (L4, L5) 1) Walton Properties (L3) Nebraska Leather Amount 86,935 27,600 7,890 300,000 192,150 187,680 27,890 38,950 23,408 10,646 731,500 6,238 78,800 66,600 144,400 11,402 158,420 136,780 75,450 788,900 141,580 61,000 500,000 63,800 58,700 22,750 37,258 21,387 4,540 25,000 1) Alice Fair was married to Patricia Fair's brother, Frank Fair, until their divorce in 2010. Does this affect auditor independence? RP Proli Footwear Excerpts from Operating Account Check Register (1/2) Date Check # 12/18/2014 3705 3706 3707 3708 3709 3710 3711 3712 3713 3714 3715 3716 3717 3718 3719 3720 3721 3722 3723 3724 3725 3726 3727 3728 3729 3730 3731 3732 3733 3734 3735 3736 3737 12/23/2014 12/26/2014 12/30/2014 1/2/2015 1/5/2015 Payee Payroll Transfer CT Telephone Co Performance Truck Repair Walton Trust Lucky Advertising Petty Cash Custodian Proli Florist Computer Supply House Scuff GB Leather a) Waterbury real estate taxes Bug Computers City of Proli-personal property taxes Red Cross/Shield City of Proli-real estate taxes Waterbury personal property taxes Elfriede's Famous Fabrics 1) Void** 2) Fred's Cleaning Service-Walton Standard Adhesive Payroll Transfer Big City Office Supply Blue Star Restaurant Connecticut Electric Co-Waterbury Thumpen, Lumpem & Howe, Attys Potor Trash Removal-Waterbury Carlisle Chemicals Proli Accounting Temps Lincoln Leather Veritech Adhesives P&P Mobile Phone Vijay Vinyl Supply Lucky Leathers Lucky Advertising Amount 48,000 2,750 8,590 354,302 58,000 1,300 125 9,750 132,575 23,500 128,750 10,646 12,700 12,500 8,017 73,300 8,250 23,000 148,600 124,380 1,175 23,500 130,000 23,000 90,994 35,800 58,900 32,842 25,600 85,900 12,500 57,000 1) See A-5 cutoff statement; amount of this check should be $46,300 RP 2) See A-5 cutoff statement; this check was not voided; cancelled check shows this was paid to Western GB Leather for $27,000 RP a)Scuff GB Leather is owned by Joan Scuff, wife of Goodwin Buye. Is there a related party issue? RP Proli Footwear Excerpts from Cash Receipts Journal Date Customer 12/28/2014 AAA Shoes Barb's Boots Cash Sales 12/29/2014 Sam's Sabot Sellers Mary's Mocs 12/31/2014 Allen Shoe Store Happy Feet Conn Shoe Seller Walking Feet 1/5/2015 1/6/2015 1/7/2015 1/8/2015 1/9/2015 Leather Scrap Inc-cash sale Harmony Shoe Co Shoe Mart Proli Shoe Outlet Alpha Best Shoes Well Heeled Footwear Ollie's Oxfords Boots by Bob Easy Comfort Shoes Sal's Soles Footcare Inc. Sizes for All Fashion Hound Conn Shoe Seller Betty's Booties Amount 64,325 51,866 1,895 345,000 125,789 9,526 1) 13,566 17,134 15,874 Total Deposit 118,086 470,789 T T T T 28,900 2) 301,575 61,600 45,000 128,900 186,863 51,500 59,095 28,900 166,750 11,500 10,505 104,411 2,584 11,874 85,000 408,175 315,763 110,595 217,655 118,869 1) Per deposit ticket copy, amount listed is $5,926; client states that $5,926 is amount of invoice RP 2) Per client, sale occurred and payment received on 1/2/15 and the deposit was made on 1/5/15. RP T = Traced to copy of deposit receipt noting that deposit date is 1/2/15 3 SALES 28900 CASH 4. A/R 3600 CASH 28900 3600 Proli Footwear Partial Bank Cutoff Statements December 31, 2014 Operating Account Date Check # Amount 12/31/2014 1/2/2015 1/5/2015 1/6/2015 1/7/2015 1/7/2015 1/8/2015 3724 3713 3715 3720 3721 3714 3718 3722 3723 3725 3727 3717 3719 148,600 (1) 132,575 128,750 46,300 27,000 23,500 12,500 8,250 23,000 124,380 23,500 12,700 8,017 Payroll Account Date Check # Amount 12/31/2014 1/2/2015 5105 5124 5116 5112 5101 5107 5122 5109 5102 5106 2,666 615 462 462 5,000 770 615 615 4,000 770 Deposits 52,500 408,175 315,763 140,595 217,655 Deposits 148,600 (1) Deposits 28,900 Balance 461,224 365,124 669,624 856,637 950,932 923,932 900,432 1,105,587 1,097,337 1,074,337 949,957 926,457 913,757 905,740 Balance 0 145,934 145,319 144,857 144,395 139,395 138,625 138,010 137,395 133,395 132,625 (1) See Schedule EA-2. RP. Employee payroll checks were distributed on 12/31/14 in payment of December accrual. The book entry recorded in the general ledger on 12/31/14 was: Salary expense 48,600 Bonus expense ### EA-6 Accrued expenses 148,600 ACCRUED EXP CASH 148600 148600 Proli Footwear Interbank Cash Transfer Analysis December 31, 2014 From operating account: Date Check # Amount 12/4/2014 12/18/2014 1/2/2015 3584 3705 3724 48,640 48,000 To payroll account: Date Amount 12/5/2014 12/19/2014 48,640 48,000 Proli Footwear Bank Reconciliation - Operating Account December 31, 2014 Per Client 491,224 85,000 576,224 Balance per Bank - December 31, 2014 Deposits in transit per Cash Receipts Journal 12/31/2014 Subtotal Outstanding checks: ABC Leather (1) GGG Corp. (1) CT Telephone Co. Scuff GB Leather (4) Waterbury Real Estate Taxes Bug Computers Red Cross/Shield City of Proli Potor Properties Elfriede's Famous Fabrics (2) Total Outstanding Checks Check # Date 2225 2/20/2012 Amount 15,074 2742 3706 12/23/2012 12/15/2014 975 2,750 3713 3714 3715 3717 3718 3719 12/23/2014 12/23/2014 12/23/2014 12/28/2014 12/28/2014 12/30/2014 132,575 23,500 128,750 12,700 12,500 8,017 3720 12/30/2014 73,300 Correct 2 ADV EXP 4 CASH MISC REV 410,141 Balance per trial balance 30000 CASH 166,083 Audit adjustments: f Balance per audit (1) These companies have ceased doing business. State law regarding outstanding checks does NOT apply to this situation. RP (2) Bank cut-off statement shows this check is for $46,300. The difference of $27,000 was paid to and cashed by Western GB Leather in check #3721. The sum of the two checks equals the amount shown for Elfriede's Famous Fabrics of $73,300 RP (3) Examined the December bank statement to determine whether any outstanding checks were not included in this reconciliation. On December 27, 2014 a wire transfer of $30,000 that was not recorded on the books was made to Lucky Advertising. RP (4) The president of Scuff GF Leather is Joan Scuff, wife of Goodwin Buye. This requires further investigation for related party implications. RP 30000 16059 16059 Proli Footwear Imprest Petty Cash Fund Reconciliation December 31, 2014 Counted on December 30, 2014 in the presence of Brian Baddude, petty cash custodian Bills 535.00 Coins 8.31 Stamps 6.44 Total currency and stamps Vouchers: Emergency travel advance - V Vamp b) 1,200.00 Emergency travel advance - G Buye b) 800.00 Postage stamps a) 99.00 Supplies for office a) 26.00 COD receipt for supplies a) 32.00 Cash advance - Brian Baddude b) 50.00 Gas receipt - John Jones travel c) 42.00 V Vamp - Lunch with visitors c) 157.00 Total vouchers 549.75 f L L L L 2,406.00 f 2,955.75 f Petty cash fund total Returned to me intact: Brian Baddude Counted by: RP 12/30/14 Shortage/(overage) Balance per trial balance Audit adjustments: d) 44.25 3,000.00 f Balance per audit f = footed L = Lacks approval signature; Company policy requires approval of person other than person receiving the advance. f A 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 B C D E F G H I J K L Proli Footwear Lead Schedule - Cash December 31, 2014 Account Number Account Title 1000 Imprest Petty Cash Fund 1010 Cash - Operating 1020 Imprest Payroll Cash Account 1030 Cash - Money Market Account Balance per T/B Debit Credit 3,000 166,083 0 150,000 X Impact of AJEs for this assignment on net income before income taxes = Total - - - - Adjustments - - - Debit Credit DR/CR 319,083 X=Interest Income of $4,700 included in Misc Non-Operating Income (Account #8500) - Not material for reclassification RP Balance per Audit Debit Credit M