18-31 (Substantive tests for cash balances)

18-31 (Substantive tests for cash balances) - 18-31...

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18-31 (Substantive tests for cash balances) You are the in-charge accountant examining the financial statements of the Gutzler Company for the year ended December 31, 20X0. During late October 20X0, you, with the help of Gutzler’s controller, completed an internal control questionnaire and prepared the appropriate memoranda describing Gutzler’s accounting procedures. Your comments relative to cash receipts are as follows: All cash receipts are sent directly to the accounts receivable clerk with no processing by the mail department. The accounts receivable clerk keeps the cash receipts journal, prepares the bank deposit slip in duplicate, posts from the deposit slip to the subsidiary accounts receivable ledger, and mails the deposit to the bank. The controller receives the validated deposit slips directly (unopened) from the bank. He also receives the monthly bank statement directly (unopened) from the bank and promptly reconciles it. At the end of each month, the accounts receivable clerk notifies the general ledger clerk by journal voucher of the monthly totals of the cash receipts journal for posting to the general ledger. Each month, with regard to the general ledger cash account, the general ledger clerk makes an entry to record the total debits to cash from the cash receipts journal. In addition, the general ledger clerk on occasion makes debit entries in the general ledger cash account from sources other than the cash receipts journal (e.g., funds borrowed from the bank). In the audit of cash receipts you have already performed certain of the standard
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This note was uploaded on 02/22/2011 for the course ACCT 492 taught by Professor Urdank during the Fall '10 term at University of Phoenix.

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18-31 (Substantive tests for cash balances) - 18-31...

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