EverReady Corporation is in the home building and repair business. Construction business has been in a slump, and the company has experienced financial difficulty over the past two years. Part of the problem lies in the company's desire to avoid laying off its skilled crews of bricklayers and cabinetmakers. Meeting the payroll has been a problem. The auditors are engaged to audit the 2017 financial statements. Knowing of EverReady's financial difficulty and its business policy, the auditors decided to prepare a schedule of interbank transfers covering the 10 days before and after December 31, which is the company's balance sheet date. First, the auditors used the cash receipts and disbursements journals to prepare part of the schedule shown in Exhibit 6.52.1. They obtained the information for everything except the dates of deposit and payment in the bank statements (disbursing date per bank and receiving date per bank). The auditors learned that EverReady always transferred money to the payroll account at 1st National Bank from the general account at 1st National Bank. This transfer enabled the bank to clear the payroll checks without delay. The only bank accounts in the EverReady financial statements are the two at 1st National Bank. Next, the auditors obtained the December 2017 and January 2018 bank statements for the general and payroll accounts at 1st National Bank. They recorded the bank disbursement and receipt dates in the schedule of interbank transfers. For each transfer, these dates are identical because the accounts are in the same bank. An alert auditor noticed that the 1st National Bank general account bank statement also contains deposits received from Citizen National Bank and canceled check 1799 dated January 5 payable to Citizen National Bank. This check cleared the 1st National Bank account on January 8 and was marked transfer of funds. This led to the auditors' decision to inquire about this of EverReady's chief financial officer. National Bank. This check cleared the 1st National Bank account on January 8 and was marked transfer of funds. This led to the auditors' decision to inquire about this of EverReady's chief financial officer. EXHIBIT 6.52.1 Schedule of Interbank Transfers C-5 EVERREADY CORPORATION Schedule of Interbank Transfers December 31, 2017 Prepared Date Reviewed Date Disbursing Account Receiving Account Date per Date per Date per Date per Books 24-Dec 31-Dec 08-Jan Bank 24-Dec 31-Dec 08-Jan Check Bank Amount Books Bank Bank 1417 1st National 10,463 24-Dec 24-Dec 1st National Payroll 1601 1st National 11,593/ 31-Dec 31-Dec. 1st National Payroll 1982 1st National 9,971/ 08-Jan 08-Jan 1st National Payroll Traced from cash disbursements journal. Check properly listed as outstanding on bank reconciliation. * Vouched to check cleared in bank statement Traced from cash receipts journal. Vouched deposit cleared in bank statement. Note: We scanned the cash disbursements and cash receipts journals for checks to and deposits from other bank accounts. Asked about the Citizen National Bank transactions, EverReady's chief financial officer readily admitted the existence of an off- books bank account. He explained that it was used for financing transactions in keeping with normal practice in the construction industry. He gave the auditors the December and January bank statements for the account at Citizen National Bank. In it, the auditors found the following: Check 4050 4051 4052 4053 4054 Citizen National Bank Payable to Amount Dated 1st National $10,000 23-Dec Chase Bank 12,000 28-Dec 1st National 12,000 30-Dec Chase Bank 14,000 4-Jan 1st National 20,000 8-Jan Cleared Bank 29-Dec 31-Dec 05-Jan 07-Jan 13-Jan Received from Chase Bank Chase Bank 1st National Chase Bank Deposits Amount $11,000 15,000 10,000 12,000 Date 22-Dec 30-Dec 05-Jan 07-Jan When asked about the Chase Bank transactions, EverReady's chief financial officer admitted the existence of another off-books bank account, which he said was the personal account of the principal stockholder. He explained that the stockholder often used it to finance EverReady's operations. He gave the auditors the December and January bank statements for this account at Chase Bank; in it, the auditors found the following: Chase Bank Payments check# 2220 2221 2222 Payable to Citizen National Bank Citizen National Bank Citizen National Bank Amount 11,000 15,000 12,000 Dated 22-Dec 30-Dec 7-Jan Cleared Bank 28-Dec 05-Jan 12-Jan Deposits Received from Citizen National Bank Citizen National Bank Amount 12,000 14,000 Dated 28-Dec 04-Jan An abbreviated calendar for the period is in Exhibit 6.54.2. EXHIBIT 6.54.2 S M December 20 21 2017 T T S w 23 F 25 22 24 26 27 28 29 30 31 1 2 January 2018 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Required: a. Complete the Schedule of Interbank Transfers (document C-5, Exhibit 6.52.1) by entering the new information. a. Complete the Schedule of Interbank Transfers (document C-5, Exhibit 6.52.1) by entering the new information. Prepared EVERREADY CORPORATION Schedule of Interbank Transfers December 31, 2017 Date Reviewed Date Disbursing Account Receiving Account Date per Check No Bank Amount Date per Bank Bank Date per Books Date per Bank Books 2220 28-Dec 22-Dec 4050 29-Dec 23-Dec 1417 24-Dec 24-Dec 24-Dec 24-Dec 4051 31-Dec 28-Dec 2221 05-Jan 30-Dec 4052 05-Jan 30-Dec 1601 31-Dec 31Dec 31-Dec 31-Dec 4053 07-Jan 04-Jan 1799 08-Jan 05-Jan 2222 12-Jan 07-Jan 4054 13-Jan 08-Jan 1982 08-Jan 08-Jan 08-Jan 08-Jan b. What is the actual cash balance for the three bank accounts combined, considering only the amounts given in this case information as of December 31, 2017 (before any of the December 31 payroll checks are cashed by employees)? As of January 8, 2018 (before any of the January 8 payroll checks are cashed by employees)? (Leave no cells blank - be certain to enter "O" wherever required. Negative amounts or amounts to be deducted should be indicated by a minus sign.) Chase Bank Citizen National Bank 1st National 1st Nat'l Payroll Bank(1) Actual(2) Date Check Bank(1) Actual(2) Bank(1) Actual(2) Bank(1) Actual(2) B: 2220 4050 1417 4051 2220 4050 2221 4052 1601 Dec 22 (Tue) Dec 23 (Wed) Dec 24 (Thu) Payroll checks cashed Dec 28 (Mon) Dec 28 (Mon) Dec 29 (Tue) Dec 30 (Wed) Dec 30 (Wed) Dec 31 (Thu) Dec 31 (Thu) (a) Balances Payroll Checks Cashed Jan 4 (Mon) Jan 5 (Tue) Jan 5 (Tue) Jan 5 (Tue) Jan 7 (Thu) Jan 7 (Thu) Jan 8 (Fri) Jan 8 (Fri) 4051 0 0 0 0 0 0 0 0 4053 1799 4052 2221 2222 4053 4054 1799 Jan 8 (Fri) 1982 4050 2221 4052 1601 4051 0 0 0 0 0 0 0 0 4053 1799 4052 Dec 29 (Tue) Dec 30 (Wed) Dec 30 (Wed) Dec 31 (Thu) Dec 31 (Thu) (a) Balances Payroll Checks Cashed Jan 4 (Mon) Jan 5 (Tue) Jan 5 (Tue) Jan 5 (Tue) Jan 7 (Thu) Jan 7 (Thu) Jan 8 (Fri) Jan 8 (Fri) Jan 8 (Fri) |(b) Balances Payroll Checks Cashed Jan 12 (Tue) Jan 13 (Wed) 2221 2222 4053 4054 1799 1982 0 0 0 0 0 0 0 0 2222 4054 Balances 0 0 0 0 0 0 0 0 Citizen National Bank 1st National Combined 1st Nat'l Payroll Bank(1) Actual(2) Bank(1) Actual(2) Bank(1) Actual(2) Bank(1) Actual(2) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 EverReady Corporation is in the home building and repair business. Construction business has been in a slump, and the company has experienced financial difficulty over the past two years. Part of the problem lies in the company's desire to avoid laying off its skilled crews of bricklayers and cabinetmakers. Meeting the payroll has been a problem. The auditors are engaged to audit the 2017 financial statements. Knowing of EverReady's financial difficulty and its business policy, the auditors decided to prepare a schedule of interbank transfers covering the 10 days before and after December 31, which is the company's balance sheet date. First, the auditors used the cash receipts and disbursements journals to prepare part of the schedule shown in Exhibit 6.52.1. They obtained the information for everything except the dates of deposit and payment in the bank statements (disbursing date per bank and receiving date per bank). The auditors learned that EverReady always transferred money to the payroll account at 1st National Bank from the general account at 1st National Bank. This transfer enabled the bank to clear the payroll checks without delay. The only bank accounts in the EverReady financial statements are the two at 1st National Bank. Next, the auditors obtained the December 2017 and January 2018 bank statements for the general and payroll accounts at 1st National Bank. They recorded the bank disbursement and receipt dates in the schedule of interbank transfers. For each transfer, these dates are identical because the accounts are in the same bank. An alert auditor noticed that the 1st National Bank general account bank statement also contains deposits received from Citizen National Bank and canceled check 1799 dated January 5 payable to Citizen National Bank. This check cleared the 1st National Bank account on January 8 and was marked transfer of funds. This led to the auditors' decision to inquire about this of EverReady's chief financial officer. National Bank. This check cleared the 1st National Bank account on January 8 and was marked transfer of funds. This led to the auditors' decision to inquire about this of EverReady's chief financial officer. EXHIBIT 6.52.1 Schedule of Interbank Transfers C-5 EVERREADY CORPORATION Schedule of Interbank Transfers December 31, 2017 Prepared Date Reviewed Date Disbursing Account Receiving Account Date per Date per Date per Date per Books 24-Dec 31-Dec 08-Jan Bank 24-Dec 31-Dec 08-Jan Check Bank Amount Books Bank Bank 1417 1st National 10,463 24-Dec 24-Dec 1st National Payroll 1601 1st National 11,593/ 31-Dec 31-Dec. 1st National Payroll 1982 1st National 9,971/ 08-Jan 08-Jan 1st National Payroll Traced from cash disbursements journal. Check properly listed as outstanding on bank reconciliation. * Vouched to check cleared in bank statement Traced from cash receipts journal. Vouched deposit cleared in bank statement. Note: We scanned the cash disbursements and cash receipts journals for checks to and deposits from other bank accounts. Asked about the Citizen National Bank transactions, EverReady's chief financial officer readily admitted the existence of an off- books bank account. He explained that it was used for financing transactions in keeping with normal practice in the construction industry. He gave the auditors the December and January bank statements for the account at Citizen National Bank. In it, the auditors found the following: Check 4050 4051 4052 4053 4054 Citizen National Bank Payable to Amount Dated 1st National $10,000 23-Dec Chase Bank 12,000 28-Dec 1st National 12,000 30-Dec Chase Bank 14,000 4-Jan 1st National 20,000 8-Jan Cleared Bank 29-Dec 31-Dec 05-Jan 07-Jan 13-Jan Received from Chase Bank Chase Bank 1st National Chase Bank Deposits Amount $11,000 15,000 10,000 12,000 Date 22-Dec 30-Dec 05-Jan 07-Jan When asked about the Chase Bank transactions, EverReady's chief financial officer admitted the existence of another off-books bank account, which he said was the personal account of the principal stockholder. He explained that the stockholder often used it to finance EverReady's operations. He gave the auditors the December and January bank statements for this account at Chase Bank; in it, the auditors found the following: Chase Bank Payments check# 2220 2221 2222 Payable to Citizen National Bank Citizen National Bank Citizen National Bank Amount 11,000 15,000 12,000 Dated 22-Dec 30-Dec 7-Jan Cleared Bank 28-Dec 05-Jan 12-Jan Deposits Received from Citizen National Bank Citizen National Bank Amount 12,000 14,000 Dated 28-Dec 04-Jan An abbreviated calendar for the period is in Exhibit 6.54.2. EXHIBIT 6.54.2 S M December 20 21 2017 T T S w 23 F 25 22 24 26 27 28 29 30 31 1 2 January 2018 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Required: a. Complete the Schedule of Interbank Transfers (document C-5, Exhibit 6.52.1) by entering the new information. a. Complete the Schedule of Interbank Transfers (document C-5, Exhibit 6.52.1) by entering the new information. Prepared EVERREADY CORPORATION Schedule of Interbank Transfers December 31, 2017 Date Reviewed Date Disbursing Account Receiving Account Date per Check No Bank Amount Date per Bank Bank Date per Books Date per Bank Books 2220 28-Dec 22-Dec 4050 29-Dec 23-Dec 1417 24-Dec 24-Dec 24-Dec 24-Dec 4051 31-Dec 28-Dec 2221 05-Jan 30-Dec 4052 05-Jan 30-Dec 1601 31-Dec 31Dec 31-Dec 31-Dec 4053 07-Jan 04-Jan 1799 08-Jan 05-Jan 2222 12-Jan 07-Jan 4054 13-Jan 08-Jan 1982 08-Jan 08-Jan 08-Jan 08-Jan b. What is the actual cash balance for the three bank accounts combined, considering only the amounts given in this case information as of December 31, 2017 (before any of the December 31 payroll checks are cashed by employees)? As of January 8, 2018 (before any of the January 8 payroll checks are cashed by employees)? (Leave no cells blank - be certain to enter "O" wherever required. Negative amounts or amounts to be deducted should be indicated by a minus sign.) Chase Bank Citizen National Bank 1st National 1st Nat'l Payroll Bank(1) Actual(2) Date Check Bank(1) Actual(2) Bank(1) Actual(2) Bank(1) Actual(2) B: 2220 4050 1417 4051 2220 4050 2221 4052 1601 Dec 22 (Tue) Dec 23 (Wed) Dec 24 (Thu) Payroll checks cashed Dec 28 (Mon) Dec 28 (Mon) Dec 29 (Tue) Dec 30 (Wed) Dec 30 (Wed) Dec 31 (Thu) Dec 31 (Thu) (a) Balances Payroll Checks Cashed Jan 4 (Mon) Jan 5 (Tue) Jan 5 (Tue) Jan 5 (Tue) Jan 7 (Thu) Jan 7 (Thu) Jan 8 (Fri) Jan 8 (Fri) 4051 0 0 0 0 0 0 0 0 4053 1799 4052 2221 2222 4053 4054 1799 Jan 8 (Fri) 1982 4050 2221 4052 1601 4051 0 0 0 0 0 0 0 0 4053 1799 4052 Dec 29 (Tue) Dec 30 (Wed) Dec 30 (Wed) Dec 31 (Thu) Dec 31 (Thu) (a) Balances Payroll Checks Cashed Jan 4 (Mon) Jan 5 (Tue) Jan 5 (Tue) Jan 5 (Tue) Jan 7 (Thu) Jan 7 (Thu) Jan 8 (Fri) Jan 8 (Fri) Jan 8 (Fri) |(b) Balances Payroll Checks Cashed Jan 12 (Tue) Jan 13 (Wed) 2221 2222 4053 4054 1799 1982 0 0 0 0 0 0 0 0 2222 4054 Balances 0 0 0 0 0 0 0 0 Citizen National Bank 1st National Combined 1st Nat'l Payroll Bank(1) Actual(2) Bank(1) Actual(2) Bank(1) Actual(2) Bank(1) Actual(2) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0