I would greatly appreciate assistance with this problem. Additional photos were
ID: 2547506 • Letter: I
Question
I would greatly appreciate assistance with this problem. Additional photos were taken for clarity. Thank you in advance!
Below is a typed version of the question in case the pictures are hard to decipher!
Daisey Company is a very profitable small business. It has not, however, given much consideration to internal control. For example, in an attempt to keep clerical and office expenses to a minimum, the company has combined the jobs of cashier and bookkeeper. As a result, Bret Turrin handles all cash receipts, keeps the accounting records, and prepares the monthly bank reconciliations.
The balance per the bank statement on October 31, 2019, was $18,380.00. Outstanding checks were No. 62 for $140.75, No. 183 for $180.00, No. 284 for $253.25, No. 862 for $190.71, No. 863 for $226.80, and No. 864 for $165.28. Included with the statement was a credit memorandum of $185.00 indicating the collection of a note receivable for Daisey Company by the bank on October 25. This memorandum has not been recorded by Daisey.
The company’s ledger showed one Cash account with a balance of $21,877.72. The balance included undeposited cash on hand. Because of the lack of internal controls, Bret took for personal use all of the undeposited receipts in excess of $3,795.51. He then prepared the following bank reconciliation in an effort to conceal his theft of cash.
165.28
482.79
3,795.51
185.00
$18,380.00
Cash balance per books, October 31 $21,877.72 Add: Outstanding checks No. 862 $190.71 No. 863 226.80 No. 864165.28
482.79
22,360.51 Less: Undeposited receipts3,795.51
Unadjusted balance per bank, October 31 18,565.00 Less: Bank credit memorandum185.00
Cash balance per bank statement, October 31$18,380.00
Explanation / Answer
Daisey Bank reconciliation
Balance per bank statement $18,380.00
Add: Undeposited receipts 3,795.51
$22,175.51
Less: Outstanding Checks
No: 62 140.75
No.183 180.00
No.284 253.25
No.862 190.71
No.863 226.80
No.864 165.28 1156.79
Adjusted balance per bank 21018.72
Cash balance per book 21877.72
Add: Bank credit memorandum 185.00
Adjusted balance per book 22062.72
Less: Theft (22062.72- 21018.72) 1044.00
Adjusted balance per book 21018.72