Following is a bank reconciliation for Zocar Enterprises for June 30, Year 2: Cash Account Bank Statement Balance as of 6/30/Year 2 $ 23,350 $ 20,745 Deposit in transit 3,750 Outstanding checks (400 ) Note collected by bank 1,410 Bank service charge (15 ) NSF check (650 ) Adjusted cash balance as of 6/30/Year 2 $ 24,095 $ 24,095 As part of the normal process for handling an NSF check, the accounting clerk has notified the customer that their account did not contain sufficient funds to pay the balance owed to the company. The customer was told that they will need to provide an alternative form of payment to cover the outstanding balance. c. Assume the clerk had stolen $650 cash, and recorded an entry for a nonexistent NSF check to reduce the cash balance so that it would match the bank balance. Select the internal control practice that would have most likely prevented this fraud.
Following is a bank reconciliation for Zocar Enterprises for June 30, Year 2: Cash Account Bank Statement Balance as of 6/30/Year 2 $ 23,350 $ 20,745 Deposit in transit 3,750 Outstanding checks (400 ) Note collected by bank 1,410 Bank service charge (15 ) NSF check (650 ) Adjusted cash balance as of 6/30/Year 2 $ 24,095 $ 24,095 As part of the normal process for handling an NSF check, the accounting clerk has notified the customer that their account did not contain sufficient funds to pay the balance owed to the company. The customer was told that they will need to provide an alternative form of payment to cover the outstanding balance. c. Assume the clerk had stolen $650 cash, and recorded an entry for a nonexistent NSF check to reduce the cash balance so that it would match the bank balance. Select the internal control practice that would have most likely prevented this fraud.
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter5: Internal Control And Cash
Section: Chapter Questions
Problem 5.5.3C
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Question
Following is a bank reconciliation for Zocar Enterprises for June 30, Year 2:
| Cash Account |
Bank Statement |
|||||||
| Balance as of 6/30/Year 2 | $ | 23,350 | $ | 20,745 | ||||
| Deposit in transit | 3,750 | |||||||
| Outstanding checks | (400 | ) | ||||||
| Note collected by bank | 1,410 | |||||||
| Bank service charge | (15 | ) | ||||||
| NSF check | (650 | ) | ||||||
| Adjusted cash balance as of 6/30/Year 2 | $ | 24,095 | $ | 24,095 | ||||
As part of the normal process for handling an NSF check, the accounting clerk has notified the customer that their account did not contain sufficient funds to pay the balance owed to the company. The customer was told that they will need to provide an alternative form of payment to cover the outstanding balance.
c. Assume the clerk had stolen $650 cash, and recorded an entry for a nonexistent NSF check to reduce the cash balance so that it would match the bank balance. Select the internal control practice that would have most likely prevented this fraud.
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