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You are auditing cash in bank for Pandemic Supply Corp. for the fiscal year ended March 31. The client has not prepared the March 31
You are auditing cash in bank for Pandemic Supply Corp. for the fiscal year ended March 31. The client has not prepared the March 31 bank reconciliation. After a brief discussion with the owner, you agree to prepare the reconciliation with assistance from one of Pandemic Supply's clerks. You have obtained the following information: General Ledger Bank Statement Beginning balances $36,500 $ 41,050 Deposits 17,800 Cash receipts journal 22,450 Cheques cleared by bank (23.688) Cash disbursements journal (43,738) March bank service charge (150) Note paid directly by bank (11,470) NSF cheque not honored by bank (912) Ending balances $ 15,212 $ 22.630 Feb. 29 Bank Reconciliation: Information in General Ledger and Bank Statement Balance per bank $41,050 Deposits in transit 400 Outstanding cheques 4,950 Balance per books 36,500 In addition, the following information is obtained: 1. Cheques clearing that were outstanding on February 29 totaled $4,950. 2. Cheques clearing that were recorded in the March disbursements journal totaled $18,738. 3. A cheque for $1,500 cleared the bank but had not been recorded in the cash disbursements journal. It was for an acquisition of inventory. Pandemic Supply the periodic inventory method. 4. A cheque for $1,100 was charged to Pandemic Supply but had been written on an associated company's bank account. 5. Deposits included $400 from February and $17,400 for March. 6. The bank withdrew from Pandemic Supply's account a nonsufficient funds (NSF) customer cheque totaling $912. The credit manager concluded that the customer intentionally closed its account and that the owner had left the city. The account was turned over to a collection agency. 7. The bank deducted $11,100 plus interest from Pandemic Supply's account for a loan made by the bank under an agreement signed four months ago. The note payable was recorded at $11,100 on Pandemic Supply's books. Required a. Prepare a bank reconciliation that shows both the (1) unadjusted and adjusted balances per the general ledger and (2) unadjusted and adjusted balances per the bank. b. Identify the nature of adjustments required
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