Accounting 2320
CASH PROOF PROBLEM
Information obtained in the audit of the Illinois Company is presented below:
1. The balance per the Illinois Company’s general ledger Cash account
(‘books’) is $21,000 at December 31, 2005
2. The balance in the Danville National Bank per their confirmation (‘bank”) is
$22,700 at December 31, 2005.
3. Outstanding checks at December 31, 2005 total $2,800.
4. Danville National Bank returned to Illinois Company with the November 30,
2005 bank statement an NSF check for $300. Illinois Company had received
the check from one of its customers and deposited it on November 22, 2005.
On December 3, 2005, Illinois Company recorded the NSF check by an
appropriate entry in the Cash Disbursements journal.
5. Deposits in Transit:
a. December 31 = $1,100
b. November 30 = $900
6. Checks outstanding at November 30, 2005 totaled $2,200.
7. At November 30, 2005, Cash balances were:
a. Per Bank Statement = $14,200
b. Per General Ledger Cash account (‘books’) = $13,200
8. Cash journals on the books for December 2005 show totals of:
a. Cash Receipts journal = $115,990
b. Cash Payments journal = $ 108,190
9. Total deposits (credits) for December 2005 per the Bank Statement are
$116,800
10. A Bank “credit” memo dated December 14, 2005 shows Illinois’ bank
account was increased for $810. This was a bank error. The bank
“corrected” Illinois bank balance on December 19 by processing a Bank
“debit memo” for $810.
Requirements:
1.) Complete the Cash Proof (4-column bank reconciliation) on
an Excel spreadsheet
2.) State the amount of Cash that should appear on the Illinois
Company’s December 31, 2005 Balance Sheet.
3.) Provide an explanation of your conclusions as to the accuracy
of Illinois Company’s cash records.