Interbank Transfers. You can use the computer-based Electronic Workpapers on the textbook website to prepare the schedule of interbank transfers required in this problem.

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 companys 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 EverReadys 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 companys 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.

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
Check	Bank	Amount	Date per Books	Date per Bank		Bank	Date per Books	Date per Bank
1417	1st National	10,463	24-Dec	24-Dec m		1st National Payroll	24-Dec	24-Dec n
1601	1st National	11,593	31-Dec b	31-Dec m		1st National Payroll	31-Dec	31-Dec n
1982	1st National	9,971	08-Jan	08-Jan m		1st National Payroll	08-Jan	08-Jan n

Note: We scanned the cash disbursements and cash receipts journals for checks to and deposits from other bank accounts.

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 EverReadys chief financial officer.

Asked about the Citizen National Bank transactions, EverReadys 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:

Citizen National Bank
Check	Payable to	Amount	Dated	Cleared Bank
4050	1st National	$10,000	23-Dec	29-Dec
4051	Chase Bank	12,000	28-Dec	31-Dec
4052	1st National	12,000	30-Dec	05-Jan
4053	Chase Bank	14,000	4-Jan	07-Jan
4054	1st National	20,000	8-Jan	13-Jan

Deposits
Received from	Amount	Date
Chase Bank	$11,000	22-Dec
Chase Bank	15,000	30-Dec
1st National	10,000	05-Jan
Chase Bank	12,000	07-Jan

When asked about the Chase Bank transactions, EverReadys 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 EverReadys 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 #	Payable to	Amount	Dated	Cleared Bank
2220	Citizen National Bank	11,000	22-Dec	28-Dec
2221	Citizen National Bank	15,000	30-Dec	05-Jan
2222	Citizen National Bank	12,000	7-Jan	12-Jan

Deposits
Received from	Amount	Dated
Citizen National Bank	12,000	28-Dec
Citizen National Bank	14,000	04-Jan

An abbreviated calendar for the period is in Exhibit 6.52.2.

EXHIBIT 6.52.2

	S	M	T	W	T	F	S
December 2017	20	21	22	23	24	25	26
	27	28	29	30	31
January 2018						1	2
	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 6.54.1) by entering the new information.

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)? (Hint: Prepare a schedule of bank and actual balances.)