Toyco, a retail toy chain, honors two bank credit cards and makes daily deposits of credit card sales in two credit card bank accounts (Bank A and Bank B). Each day Toyco batches its credit card sales slips, bank deposit slips, and authorized sales return documents and sends them to data processing for data entry. Each week detailed computer printouts of the general ledger credit card cash accounts are prepared. Credit card banks have been instructed to make an automatic weekly transfer of cash to Toyco's general bank account. The credit card banks charge back deposits that include sales to holders of stolen or expired cards.

The auditor examining the Toyco financial statements has obtained copies of the detailed general ledger cash account printouts, a summary of the bank statements, and the manually prepared bank reconciliations, all for the week ended December 31, as shown here.

Required

Review the December 31 bank reconciliation and the related information contained in the following schedules, and describe what actions the auditor should take to obtain satisfaction for each item on the bank reconciliation. Assume that all amounts are material and that all computations are accurate. Organize your answer sheet as follows, using the code contained on the bankreconciliation:

Transcribed Image Text:

Toyco Summary of the Bank Statements for the Week Ended December 31, 2007 BANK A BANK B (Charges) or Credits $10,000 2,100 2,500 3,000 2,000 1,900 Beginning balance, December 24 Deposits dated: December 24 December 27 December 28 December 29 December 30 4,200 5,000 7,000 5,500 4,000 Cash transfers to general bank account: December 27 December 31 (10,700) (22,600) Chargebacks (100) (300) (1,400) Stolen cards Expired cards Invalid deposits Bank service charges Bank charge (unexplained) Ending balance (1,600) (1,000) (500) (400) $8,600