Check No. Date of Check Bank Drawn On Payee Amount
2476 June 23 Regular Payroll $100,000
2890 June 25 Regular Payroll 200,000
3140 June 28 Regular Special 100,000
A1006 June 29 Special Payroll 50,000
A1245 June 30 Special Regular 25,000
3402 June 30 Regular Special 125,000
You determine the following facts about each of the first five checks: (1) the date of the cash disbursements journal entry is the same as the date of the check, (2) the payee receives the check two days later, (3) the payee records and deposits the check on the day it is received, and (4) it takes five days for a deposited check to clear banking channels and be paid by the bank on which it is drawn. Check 3402 was not recorded as a disbursement until July 1. This check was picked up by the payee on the date it was issued, and it was included in the payee’s after-hours bank deposit on June 30.
a. What are the purposes of the audit of bank transfers?
b. Prepare a bank transfer schedule as of June 30.
c. Prepare separate adjusting entries for any checks that require adjustment.
d. In the reconciliation for the three bank accounts, indicate the check numbers that should appear as (1) an outstanding check or (2) a deposit in transit.
e. Which check(s) may be indicative of kiting?
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