[watermelon]

The information below was taken from the bank transfer schedule prepared during the audit of Fox Co.’s financial statements for the year ended December 31, 20X1. Assume all checks are dated and issued on December 30, 20X1.
Bank Accounts
Check No. To From
101 National Federal
202 County State
303 Federal American
404 State Republic
Disbursement Date Receipt Date
Check No. Per Books Per Bank Per Books Per Bank
101 Dec. 30 Jan. 4 Dec. 30 Jan. 3
202 Jan. 3 Jan. 2 Dec. 30 Dec. 31
303 Dec. 31 Jan. 3 Jan. 2 Jan. 2
404 Jan. 2 Jan. 2 Jan. 2 Dec. 31
Which of the following checks might indicate kiting?
a. #202 and #303.
b. #101 and #303.
c. #101 and #404.
d. #202 and #404.
Correct Answer is D: 202 and 404

Can someone help me with 404? I thought both receipt and disburse per book was booked during Jan, there is no kitting for Year 1, and i am confused by per book/per account as well… anyone could help?

[Recked]

The formatting is pretty bad, but 202 and 404 are the only 2 that are in reverse chronological order., Jan 3 and Jan 2, and then Jan 2 and Dec 31.

[watermelon]

I tried to fix the format before posting but still looks so messy! sorry about that.
Do you mean the date per book always precedes the date per bank? and for 404, if bank deposits during Year 1 but it's not recorded til Year 2 in book, does it still count as Kitting? that's what I was confused about.
Thank you!!

[Anonymous]

(I recently did this question on Wiley so i can forgive the formatting!)

Its what Recked said about the dates. if the bank has the dates in december then how could they have not entered them in their books until January if everything was on the up-and-up? They've delayed the entry in their books to inflate the account they're paying from, and also recognised the cash in the account theyre paying into, thus double counting the same chunk of cash and so that is suspicious… that's basically it.

TL;DR If they're fudging the dates which results in double counting the same cash -> That's Kitting

[watermelon]

Thank you guys! appreciate your help!

[Author]

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