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 send 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 bank reconciliation:

Toyco
Detailed General Ledger Credit Card Cash Accounts Printouts
for the Week Ended December 31, 2011

Toyco
Summary of the Bank Statements for the Week Ended December 31, 2011

Transcribed Image Text:

Code Number Actions to Be Taken by the Auditor to Gain Satisfaction Toyco Bank Reconciliation for December 31, 2011 BANK A BANK B Code No. Add or (Deduct) 1 Balance per bank statement, December 31 2. Deposits in transit, December 31 $8,600 2,200 3 Redeposit of invalid deposits (deposit ed in wrong account1,000 (2,000) AU) 0- 6,000 1A010 (100) . Bank service charges 8 Chargebacks not recorded stolen cards 9. Sales returns recorded but not reported to the bank 22,600 500 0 10) (600) (1,200) $29,200 10. Balance per general ledger, December 31 BANK A BANK B Dr. or (Cr.) Beginning balance, December 24 Deposits: December 27 $12,100 2,500 3,000 $4,200 5,000 7,000 5,400 4,000 6,000 -0 (1,600) (1,000) 1,400 December 28 December 29 December 30 December 31 Cash transfer, December 17 Chargebacks expired cards Invalid deposits (deposited in wrong account) Redeposit of invalid deposits Sales returns for week ended December 31 Ending balance 1,900 2,200 (10,700) (300) (1,400) 1,000 (60012001 $29,200 $9.700 (Charges) or Credits $10,000 Beginning balance, December 24 Deposits dated: December 24 Cash transfers to general bank account: (10,700) (1,400) Bank service charges Bank charge (unexplained) (400