ramble 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, 2020, was $18,620. Outstanding checks were No. 62 for $140.00, No. 183 for $187, No. 284 for $261.50, No. 862 for $211.40, No. 863 for $244.00, and No. 864 for $169.40. Included with the statement was a credit memorandum of $114.80 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 $21,980.00. 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 $3,770.00. He then prepared the following bank reconciliation in an effort to conceal his theft of cash. Cash balance per books, October 31 $21,980.00 Add: Outstanding checks No. 862 $211.40 No. 863 244.00 No. 864 169.40 524.80 22,504.80 Less: Undeposited receipts 3,770.00 Unadjusted balance per bank, October 31 18,734.80 Less: Bank credit memorandum 114.80 Cash balance per bank statement, October 31 $18,620 (a) Prepare a correct bank reconciliation. (Hint: Deduct the amount of the theft from the adjusted balance per books.) (Round answers to 2 decimal places, e.g. 52.75. List items that increase cash balance first. Reconcile cash balance per bank first.)
Bramble 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, 2020, was $18,620. Outstanding checks were No. 62 for $140.00, No. 183 for $187, No. 284 for $261.50, No. 862 for $211.40, No. 863 for $244.00, and No. 864 for $169.40. Included with the statement was a credit memorandum of $114.80 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 $21,980.00. 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 $3,770.00. He then prepared the following bank reconciliation in an effort to conceal his theft of cash.
| Cash balance per books, October 31 | $21,980.00 | |||||
| Add: | Outstanding checks | |||||
| No. 862 | $211.40 | |||||
| No. 863 | 244.00 | |||||
| No. 864 | 169.40 | 524.80 | ||||
| 22,504.80 | ||||||
| Less: Undeposited receipts | 3,770.00 | |||||
| Unadjusted balance per bank, October 31 | 18,734.80 | |||||
| Less: Bank credit memorandum | 114.80 | |||||
| Cash balance per bank statement, October 31 | $18,620 |
(a)
Prepare a correct bank reconciliation. (Hint: Deduct the amount of the theft from the adjusted balance per books.) (Round answers to 2 decimal places, e.g. 52.75. List items that increase cash balance first. Reconcile cash balance per bank first.)
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