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Internal Control and Accounting for Cash
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Obtain the Target Corporation’s annual report at http://investors.target.com using the instructions in Appendix B, and use it to answer the following questions:
a. Who are the independent auditors for Target?
b. What type of opinion did the independent auditors issue on Target’s financial statements?
c. On what date does it appear the independent auditors completed their work related to Target’s financial statements for the fiscal year ended January 28, 2017 (2016)?
d. Does the auditors’ report give any information about how the audit was conducted? If so, what does it suggest was done?
e. Does the auditors’ report tell the reader that the audit was concerned with materiality rather than absolute accuracy in the financial statements?
The following cash and bank information is available for three companies at June 30, Year 1:
| Cash and Adjustment Information | Peach Co. | Apple Co. | Pear Co. |
|---|---|---|---|
| Unadjusted cash balance per books, 6/30 | $45,620 | $32,450 | $23,467 |
| Outstanding checks | 1,345 | 2,478 | 2,540 |
| Service charge | 50 | 75 | 35 |
| Balance per bank statement, 6/30 | 48,632 | 37,176 | 24,894 |
| Credit memo for collection of notes receivable | 4,500 | 5,600 | 3,800 |
| NSF check | 325 | 145 | 90 |
| Deposits in transit | 2,500 | 3,200 | 4,800 |
| Credit memo for interest earned | 42 | 68 | 12 |
Required
a. Organize the class into three sections and divide each section into groups of three to five students. Assign Peach Co. to section 1, Apple Co. to section 2, and Pear Co. to section 3.
Group Tasks
(1) Prepare a bank reconciliation for the company assigned to your group.
(2) Prepare any necessary journal entries for the company assigned to your group.
(3) Select a representative from a group in each section to put the bank reconciliation and required journal entries on the board.
Class Discussion
b. Discuss the cause of the difference between the unadjusted cash balance and the ending balance for the bank statement. Also, discuss types of adjustments that are commonly made to the bank balance and types of adjustments commonly made to the unadjusted book balance.
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