The controller of ABC Inc., a nonissuer, prepared the 5 exhibits relating to ABC's cash position at year-end. A new staff auditor with your CPA firm has begun to audit cash and has a number of points he suggests should be forwarded to the engagement partner. Your job as senior on the engagement is to review the various points made by the staff auditor. The materiality for the audit has, at this point, been set at $50,000. To revise the memo, click on each segment of underlined text below and select the needed correction, if any, from the list provided. If the underlined text is already correct in the context of the document, select [Original Text] from the list. If removal of the entire underlined text is the best revision to the document as a whole, select [Delete Text] from the list when that option is available. 1. Cash Lead Schedule: The company's petty cash (account 101) is stated at $50. But Mr. Adams acknowledges that there was only $43 in the account as of year-end as a $7.00 expenditure for supplies had been made. This overstates cash by $7.00, although pass adjustment due to immateriality. ' 2. Bank Reconciliation: The note was collected by the bank on December 29 , year 1 . ABC recorded the entry for the proper amount on December 31 , year 1. Accordingly, collection of this note is a proper reconciling item at yearend. 3. Standard Bank Confirmation: The bank representative added somewhat of a disclaimer to the confirmation. However, this disclaimer seems to be a "boilerplate" disclaimer of liability that the bank may place on all confirmations and may not affect the reliability of the information we obtained. 4. Outstanding Checks: I noted that the outstanding check list is not totaled properly. The $7,122.08 should be $9,122.08. We should prepare a journal entry debiting cash and crediting miscellaneous expense. ' 5. Deposit in Transit: The deposit in transit was listed on the January bank cutoff statement (not included here) as having been received January 9 . This seems a long time to clear and could be consistent with December cash receipts having been deferred to January. 6. Standard Bank Confirmation (and Cash Lead Schedule): Account 103, the certificate of deposit on the lead schedule: we need to confirm this account.' 7. Outstanding Checks: I noticed that the January bank cutoff statement (not included here) included check 2031 dated on 12/30 for $1,500 to Jenco Corp. I found the check to be properly recorded in the cash disbursements journal as of 12/30/ year 1 . No further actions are necessary related to check 2031. The controller of ABC Inc., a nonissuer, prepared the 5 exhibits relating to ABC's cash position at year-end. A new staff auditor with your CPA firm has begun to audit cash and has a number of points he suggests should be forwarded to the engagement partner. Your job as senior on the engagement is to review the various points made by the staff auditor. The materiality for the audit has, at this point, been set at $50,000. To revise the memo, click on each segment of underlined text below and select the needed correction, if any, from the list provided. If the underlined text is already correct in the context of the document, select [Original Text] from the list. If removal of the entire underlined text is the best revision to the document as a whole, select [Delete Text] from the list when that option is available. 1. Cash Lead Schedule: The company's petty cash (account 101) is stated at $50. But Mr. Adams acknowledges that there was only $43 in the account as of year-end as a $7.00 expenditure for supplies had been made. This overstates cash by $7.00, although pass adjustment due to immateriality. ' 2. Bank Reconciliation: The note was collected by the bank on December 29 , year 1 . ABC recorded the entry for the proper amount on December 31 , year 1. Accordingly, collection of this note is a proper reconciling item at yearend. 3. Standard Bank Confirmation: The bank representative added somewhat of a disclaimer to the confirmation. However, this disclaimer seems to be a "boilerplate" disclaimer of liability that the bank may place on all confirmations and may not affect the reliability of the information we obtained. 4. Outstanding Checks: I noted that the outstanding check list is not totaled properly. The $7,122.08 should be $9,122.08. We should prepare a journal entry debiting cash and crediting miscellaneous expense. ' 5. Deposit in Transit: The deposit in transit was listed on the January bank cutoff statement (not included here) as having been received January 9 . This seems a long time to clear and could be consistent with December cash receipts having been deferred to January. 6. Standard Bank Confirmation (and Cash Lead Schedule): Account 103, the certificate of deposit on the lead schedule: we need to confirm this account.' 7. Outstanding Checks: I noticed that the January bank cutoff statement (not included here) included check 2031 dated on 12/30 for $1,500 to Jenco Corp. I found the check to be properly recorded in the cash disbursements journal as of 12/30/ year 1 . No further actions are necessary related to check 2031