Case Info: You are auditing the general cash account for the Simply Soups Inc. for the fiscal year ended December 31, 2017. The client has not prepared the December 31, 2017 bank reconciliation. After a brief discussion with the Controller, you agree to prepare the reconciliation, with assistance from one of Simply Soups accounting clerks. You obtain the following information:

	From General Ledger (Per Books)	From Bank Statement (Per Bank)
Beginning balance of cash 12/1/2017	$ 506,074.33	$ 508,052.33
Deposits clearing the bank per the December bank statement		25,474.00
Checks clearing the bank per the December bank statement		25,307.00
December cash receipts (per the Cash Receipts Journal)	26,874.00
December cash disbursements (per the Cash Disbursements Journal)	54,026.79
Ending balance of cash 12/31/2017	$ 478,921.54	$ 508,219.33

Additional information obtained is as follows:

1. A check for $1,130 cleared the bank in December (per bank statement) but had not been recorded in the cash disbursements journal (per books) and therefore was not reflected in the December 31, 2017 balance of cash in the general ledger. This check was for an acquisition of inventory. Simply Soups uses the periodic-inventory method.
2. A check for $646 was charged to Simply Soups account by the bank on December 10 (per bank statement) but this check had been written on a different companys bank account and therefore is not a check issued by Simply Soups.
3. Deposits clearing the bank in December (per bank statement) included $600 from Novembers deposits in transit.
4. Checks clearing the bank in December (per bank statement) included $2,578 from Novembers outstanding checks.
5. The bank charged Simply Soups account for a nonsufficient check totaling $516 on December 25 (per bank statement). The credit manager concluded that the customer intentionally closed its account.
6. A note payable for $6,000, plus interest of $400, was automatically paid from the bank account on December 1 (per bank statement), under an agreement signed 4 months before December. The note payable was recorded on Simply Soups books at the inception of the agreement.
7. The bank statement reflected bank service charges of $107 for December.

Requirements:

1. Prepare a bank reconciliation that shows both the unadjusted and adjusted balance per books. See the Bank Reconciliation Form in Tab 1 of the Bank Reconciliation Excel file. (see next page)

Requirements continued:

1. Prepare the adjusting journal entry to adjust cash for the items identified in the bank reconciliation. See the Bank Reconciliation Form in Tab 1 of the Bank Reconciliation Excel file.
2. Review the audit procedures listed below that have been planned to test the bank reconciliation. Workpapers related to some of these procedures have been included in the Bank Reconciliation Excel file as additional tabs including the following items:
   • Tab 2 Simply Soups Check Register for December
   • Tab 3 Fifth Federal Bank Statement for December 2017
   • Tab 4 Fifth Federal Bank Cutoff Statement for January 2018
   • Tab 4 Confirmation Reply from Fifth Federal Bank

BANK RECONCILIATION ITEM	AUDIT PROCEDURE
1. Deposits in transit	Trace to duplicate deposit slip and entry on cutoff bank statement for January.
2. Erroneous check	Examine correction notice received from bank subsequent to year end.
3. Outstanding checks	Obtain cutoff bank statement for January. Trace enclosed checks to outstanding check list. Trace uncleared items to supporting documentation.
4. Bank service charge	Examine advice returned with December bank statement.
5. Note payment	Examine cancelled note. Recompute interest. Check for absence of note on 12/31 bank confirmation.
6. NSF check	Examine advice returned with December bank statement. Examine other related evidence from credit manager to determine if account is uncollectible.
7. Unrecorded check	Examine check returned with December bank statement. Trace number to absence in December cash disbursements journal and whether recorded in January. Examine supporting documentation. Investigate why unrecorded.
Balance per bank	Confirm the bank balance listed in the bank reconciliation with the bank.