Eagle River Plastics Company has a major branch located in Phoenix
10-60    LO 8 Eagle River Plastics Company has a major branch located in Phoenix. The branch deposits cash receipts daily and periodically transfers the receipts to the company’s home office in Eagle River. The transfers are accounted for as intercompany entries into the home office and branch office accounts. All accounting, however, is performed at the home office under the direction of the assistant controller. The assistant controller is also responsible for the trans- fers. The controller, however, independently reconciles the bank account each month or assigns the reconciliation to someone in the department (in some cases, could be the assistant controller). The company is relatively small; therefore, the controller is also the financial planner and treasurer for the company. As part of the
year-end audit, you are assigned the task of conducting an audit of bank transfers. As part of the process, you prepare the following schedule of transfers:
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Information from Client’s Records                  Information per Bank Statements
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Date per Branch
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Date per Amount
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Date Deposited Home Office
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Date Cleared
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per Home Bank     per Branch Bank
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12-27
|
$23,000
|
12-31
|
12-31
|
1-3
|
|
12-29
|
$40,000
|
12-31
|
12-31
|
1-7
|
|
12-31
|
$45,000
|
1-2
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1-3
|
1-8
|
|
1-2
|
$14,000
|
12-31
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12-31
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1-5
|
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1-5
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$28,000
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1-3
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1-7
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1-12
|
|
1-3
|
$10,000
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1-3
|
12-31
|
1-5
|
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a.      Identify the substantive audit procedures that would be used to test the correctness of the client’s bank transfers.
b.      Identify any adjusting journal entries that would be needed on either the home or branch office accounting records as a result of the preceding transactions.
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Answers
Status NEW
Posted 13 May 2017 11:05 AM
My Price 8.00
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