Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You are the senior auditor-in-charge of the July 31, 20X0, audit of Reliable Auto Parts, Inc. Your newly hired staff assistant reports to you that

You are the senior auditor-in-charge of the July 31, 20X0, audit of Reliable Auto Parts, Inc. Your newly hired staff assistant reports to you that she is unable to complete the four-column proof of cash for the month of April 20X0, which you instructed her to do as part of the consideration of internal control over cash.

Your assistant shows you the working paper that she has prepared. Your review of your assistants work reveals that the dollar amounts of all the items in her working paper are correct. You learn that the accountant for Reliable Auto Parts, Inc., makes no journal entries for bank service charges or note collections until the month following the banks recording of the item. In addition, Reliables accountant makes no journal entries whatsoever for NSF checks that are redeposited and cleared. Your assistants working paper appears below.

RELIABLE AUTO PARTS, INC.
Proof of Cash for April 20X0
July 31, 20X0
Balance Balance
3/31/X0 Deposits Checks 4/30/X0
Per bank statement $ 71,755.07 $ 61,549.62 $ 68,188.89 $ 65,115.80
Deposits in transit:
At 3/31/X0 2,120.31 (2,120.31 )
At 4/30/X0 4,923.08 4,923.08
Outstanding checks:
At 3/31/X0 (14,903.13 ) 14,903.13
At 4/30/X0 (22,937.75 ) 22,937.75
Bank service charges:
March 20X0 (22.20 ) 22.20
April 20X0 (19.16 ) 19.16
Note receivable collected by bank 4/30/X0 18,200.00 18,200.00
NSF check of customer L. G. Waite, charged back by bank 3/31/X0, redeposited and cleared 4/3/X0 (418.57 ) 418.57
Balances as computed 58,531.48 85,091.27 60,157.31 109,075.48
Balances per book 59,413.02 45,733.82 76,226.55 28,920.29
Unlocated difference $ (881.54 ) $ 39,357.45 $ (16,069.24 ) $ 80,155.19

Required:

Prepare a corrected four-column proof of cash in good form for Reliable Auto Parts, Inc., for the month of April 20X0. (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Management And Cost Accounting Tools And Concepts In A Central European Context

Authors: Andreas Taschner, Michel Charifzadeh

1st Edition

3527508228, 978-3527508228

More Books

Students also viewed these Accounting questions