Purpose of Assignment?
Reconciling bank accounts is a good way to help maintain internal
controls over cash. With time lags and posting errors it is easy for cash transactions to be omitted, recorded in a different accounting period, or reflect incorrect amounts. This assignment with give you practical experience in reconciling the cash balance as noted on the company books to the bank's records.?
Resources:?Financial Accounting: Tools for Business Decision Making?
Scenario:?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 book-keeper. 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, 2017, was $18,380. Outstanding checks were No. 62 for $140.75, No. 183 for $180, 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 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 undepositied 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:
Cash balance per books, October 31?$21,877.72Add: Outstanding checks??No. 862$190.71?No. 863226.80?No. 864165.28482.79??22,360.51Less: Undeposited receipts?3,795.51Unadjusted balance per bank, October 31?18,565.00Less: Bank credit memorandum?185.00Cash balance per bank statement, October 31?$18,380.00Prepare?a 1,050-word bank reconciliation report (hint:?deduct the amount of the theft from the adjusted balance per books) including the following:?
- Indicate the three ways that Bret attempted to conceal the theft and the dollar amount involved in each method.
- What principles of internal control were violated in this case??
Show?all work in the Excel??spreadsheet and?submit?with the reconciliation report.
Click?the Assignment Files tab to submit your assignment.
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