Help on 6.53 - Auditing

Question

6.53 Required:

Check 2231 was the first check written in February. All earlier checks cleared the bank, some

during January and some during February. Assume that the only February-dated canceled

checks returned in the March bank statement are 2239 and 2240 showing the amounts listed in

the February bank reconciliation. They cleared the bank on March 3 and March 2, respectively.

The first deposit on the March bank statement was $1,097.69 credited on March 3. Assume

also that all checks entered in Caulco’s cash disbursements journal through February 29 have

either cleared the bank or are listed as outstanding checks in the February bank reconciliation.

Determine whether any errors exist in the following bank reconciliation. If errors exist,

prepare a corrected reconciliation and explain the problem.

Bank Reconciliation as of Feb 28th.

Balance per bank.......... $7,374.93

Deposit in transit..............$1,097

Outstanding Checks

Check 2239 Feb 26 Alpha Supply.......... ................(500.00)

Check 2240 Feb 28 L.C. Stateman.........................(254.37)

Total outstanding............. (754.37)

General ledger balance Feb. 28............... $7,718.25

Answer 1

This a poorly worded question.

First, the question doesn't mention if the $1097.69 was deposited in February and then cleared in March. If that is the case...then the $1097.69 is indeed a deposit in transit. If the deposit was made March and cleared in March, then it should come off the bank reconciliation.

The other problem may be a typo on your end....the deposit should be $1097.69, not $1,097.00