Problem 1

The senior auditor instructed you to prepare a four column proof of cash receipts and disbursements
for the month of August 2008.
The bank reconciliation prepared by Albarando Company at July 31 is reproduced belo !All book
disbursements ere recorded in August"
#ank #alance $2%000 #ook #alance &0%000
Add' (roceeds of note recei)able
Add' *eposit in transit% July 31 +00 by bank in July 8%000
*eposit made in bank
on
July 31 not recorded on
books until August 1%000
Total $2%+00 Total &+%000
,ess' -utstanding checks ,ess' .er)ice Charge 100
/o. &30 200
/o. &$0 1%800
/o. &$1 1%&00
/o. &$& 000 &%000 111111
Ad2usted balance &8%+00 Ad2usted balance &8%+00
3pon in4uiry about the client5s August 31 bank reconciliation% you ere informed hat it has been lost
and that no client is too busy at this time to prepare another. 6our senior auditor told you to get the
August bank statement and paid checks and to prepare the August 31 reconciliation so that you may
complete the August proof of cash.
The August bank statement is reproduced belo'
*a)ao #ank
Account name' Albarando Company
*ate *ebits Credits
July 31
August 1 1%800 +00
August 8 1%&00
August + 000 10%000
August 12 1&0 7C 1&0 7C
August 1$ 1%000
August 20 800 1&%000
August 28 1%&&0
August 2+ 100 7C 100 7C
August 31 &&0 .9
August 31 300 *:
August 31 1%820
.9 ; .er)ice Charges< *: ; *ebit :emos< 7C ; 7rror Corrected< C: ; Credit :emo
The paid checks accompanying this bank statement !all clearing in August" ere' !checks listed in
order of payment by bank"
/o. &$0 1%800 /o. &$$ 1%000 /o. &$8 1%&&0
&$1 1%&00 &$0 800 &$+ 1%820
&$& 000
The checks register re)ealed that the last check issued on August as no. &00 for (1%000 and that
check no. &$8 as for (2%&00.
Cash recei)ed for the period August 21 through 31 of (+%&00 as deposited in the bank on .eptember
1.
The debit memo on August 12 and August 31 ere customer *A=> checks returned by the bank. The
check on August 12 as immediately redeposited ithout entry. The check returned on August 31
as redeposited by the client in the bank on .eptember 1 ithout entry.
?uestions' #ased on the application of the necessary audit procedures and appropriation of the abo)e
daa% you are to pro)ide the anser to the folloing'
1. @o much is the unad2usted book receipts for AugustA
a. ( 2$%1&0 b. &2%&00 c. ( 3$%$&0 d. ( &3%300
2. @o much is the unad2usted book disbursements for AugustA
a. ( 8%&00 b. ( +%8&0 c. ( 8%800 d. ( 8%300
3. @o much is the ad2usted book receipts for AugustA
a. ( 33%0&0 b. ( 33%&$0 c. ( 3&%&00 d. ( 33%&00
&. @o much is the ad2usted book disbursement for AugustA
a. ( +%100 b. ( 8%+00 c. ( +%200 d. ( +%3&0
$. @o much is the ad2usted cash balance as of August 31% 200&A
a. ( 83%+&0 b. ( 83%000 c. ( 83%&00 d. ( 83%200