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:Prepare a four-column proof of cash covering the month of July of the current year. Identify problems, if any.

Answer 1

Bal. June 30 Receipts Disbursements Bal. July 31

Balance per Bank 355,001 835,846 684,747 506,100

Deposit in Transit

June 30 86,899 -86,899

July 31 51,240 51,240

Outstanding Checks

June 30 42,690 -42,690

July 31 73,340 73,340

Unrecorded Receipts -150,000 -150,000

Unrecorded Disbursement -150,000 -150,000

Balance per Books 399,210 650,187 565,397 484,000