Question

The auditors of Steffey Ltd. decided to study the cash receipts and disbursements for the month of July of the current year under audit. They obtained the bank reconciliations and the cash journals prepared by the company accountants, which revealed the following:

June 30: Bank balance, $355,001; deposits in transit, $86,899; outstanding checks, $42,690; general ledger cash balance, $399,210.
July 1: Cash receipts journal, $650,187; cash disbursements journal, $565,397.
July 31: Bank balance, $506,100; deposits in transit, $51,240; outstanding checks, $73,340; general ledger cash balance, $484,000. Bank statement record of deposits: $835,846; of payments: $684,747.

Required:

In Excel, prepare a four-column proof of cash covering the month of July of the current year. Identify problems, if any.

Answer 1

Answer:

Four-column proof of cash covering the month of July of the current year is prepared, based on information provided, as below:

The bank statement balances and general ledger cash balances are reconciled and there is no problem identified.

Bank statement balance:

Beginning balance + Deposits - Disbursement = Ending bank balance

$355,001+ $835,846 - $684,747 = $506,100

General ledger cash balance:

$399,210 + $650,187 - $565,397 = $484,000

Reconciliation:

Ending balance -June 30:

Bank balance + Deposits in transit - Outstanding check = General ledger balannce

$355,001 + $86,899 - $42,690 = $399,210

Ending balance -July 31:

$506,100 + $51,240 - $73,340 = $484,000