Question

Problem 10-47 [LO 10-6] 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 20XO, 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 assistant's 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 bank's recording of the item. In addition, Reliable's accountant makes no journal entries whatsoever for NSF checks that are redeposited and cleared. Your assistant's working paper appears below. RELIABLE AUTO PARTS, INC. Proof of Cash for April 20x0 July 31, 20X0 Balance 3/31/X0 Deposits Checks $ 72,038.00 $61,791.18 $ 68,463.28 Balance 4/30/X0 $ 65,365.90 2,128.67 4,942.41 (2,128.67) 4,942.41 (14,961.89) 14,961.89 (23,028.20) 23,028.20 (22.28) 22.28 (19.24) 19.24 Per bank statement Deposits in transit: At 3/31/X0 At 4/30/0 Outstanding checks: At 3/31/X0 At 4/30/X0 Bank service charges : March 20x0 April 20x0 Note receivable collected by bank 4/30/x0 NSF check of customer L. G. Waite, charged back by bank 3/31/x0, redeposited and cleared 4/3/X0 Balances as computed Balances per book Unlocated difference 18,280.00 18, 280.00 ( 420.09) 420.09 58,762.4185, 433.68 59,647.15 45,904.83 (884.74) $39,528.85 60,400.01 76,532.63 $ (16,132.62) 109,507.08 29,019.35 $ 80,487.73 $

Answer 1

F G H I E Reliable Auto Parts, INC Proof of cash for April 20X0 July 31, 20X0 Balance 31/3/20X0 $72.038.00 Particulars Deposits $61.791.18 Checks $68,463.28 Balance 30/4/20X0 $65.365.90 As per Bank Statement Deposit in transit At 31/3/20X0 At 30/4/20X0 $2,128.67 ($2,128.67) $4,942.21 $0.00 $0.00 $0.00 $4,942.21 | Outstanding checks At 31/3/20X0 At 30/4/20X0 ($14.961.89) $0.00 ($14,961.89) $23,028.20 ($23,028.20) Bank service charges March 20X0 April 20X0 $22.80 $22.80 ($19.24) $19.24 Note receivable collected by bank 30/4/20X0 ($18,280.00) ($18,280.00) NSF check for customer L. G. Waite, charged back by bank 3/31/XO, redeposited and cleared 4/3/X0 $420.09 ($420.09) $0.00 $0.00 Balance as per Books $59,647.67 $45,904.63 $76,533.15 $29,019.15