12-42 Toyco, a retail toy chain, honors two bank credit cards and makes
daily deposits of credit card sales in two credit card bank accounts.
(Bank A and Bank B). Each day, Toyco batches its credit card sales
slips, bank deposit slips and authorized sales return documents and
sends them to data processing for data entry. Each week detailed
computer printouts of the general ledger credit card cash accounts are
prepared. Credit card banks have been instructed to make an automatic
weekly transfer of cash to Toyco's general bank account. The credit card
banks charge back deposits that include sales to holders of stolen or
expired cards.
The auditor examining Toyco financial statements has obtained copies of
the detailed general ledger cash account printouts, a summary of the
bank statements and the manually prepared bank reconciliations, all for
the week of December 31, as shown here. (see attachment)
Required:
Review the December 31 bank reconciliation and the related information
contained in the following schedules and describe what actions the
auditor should take to obtain satisfaction for each item on the bank
reconciliation. Assume that all amounts are material and that all
computations are accurate. Organize your answer sheet as follows, using
the code contained on the bank reconciliation:
Code Number Actions to Be Taken by the Auditor to Gain Satisfaction
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