SERIAL PROBLEM: KATE'S CARDS (Note: This is a continuation of the Serial Problem: Kate's Cards from Chapters I through 6.) SP7. On February 15, 2019, Kate Collins, owner of Kate's Cards, asks you to investigate the cash han- dling activities in her business. She believes that a new employee might be stealing funds. "I have no proof," she says, "but I'm fairly certain that the January 31, 2019, undeposited receipts amounted to more than $12,000, although the January 31 bank reconciliation prepared by the cashier (who works in the treasurer's department) shows only $7,238.40. Also, the January bank reconciliation doesn't show several checks that have been outstanding for a long time. The cashier told me that these checks needn't appear on the reconciliation because he had notified the bank to stop payment on them and he had made the necessary adjustment on the books. Does that sound reasonable to you?" At your request, Kate shows you the following (unaudited) January 31, 2019, bank reconciliation prepared by the cashier: Kate's Cards KATE'S CARDS Bank Reconciliation January 31, 2019 Ending balance from bank statement... Add: Deposits in transit... $ 4,843.69 Balance from general ledger 7,238.40 $10,893.89 $12,082.09 Less: Outstanding checks: No. 2351 Less: Bank service charge.. Unrecorded credit. 60.00 $1,100.20 No. 2353 1,200.00 (1,260.00) 578.32 No. 2354 969.68 (2,448.20) Reconciled cash balance. $ 9,633.89 Reconiled cash balance .... $ 9,633.89 You discover that the $1,200 unrecorded bank credit represents a note collected by the bank on Kate's behalf; it appears in the deposits column of the January bank statement. Your investigation also reveals that the December 31, 2018, bank reconciliation showed three checks that had been outstanding longer than 10 months: No. 1432 for $600, No. 1458 for $466.90, and No. 1512 for $253.10. You also discover that these items were never added back into the Cash account in Kate's books. In confirming that the checks shown on the cashier's January 31 bank reconciliation were outstanding on that date, you discover that check No. 2353 was actually a payment of $1,658.32 and had been recorded on the books for that amount. To confirm the amount of undeposited receipts at January 31, you request a bank statement for February 1-12 (called a cutoff bank statement). This indeed shows a January 1 deposit of $7,238.40.

SERIAL PROBLEM: KATE'S CARDS (Note: This is a continuation of the Serial Problem: Kate's Cards from Chapters I through 6.) SP7. On February 15, 2019, Kate Collins, owner of Kate's Cards, asks you to investigate the cash han- dling activities in her business. She believes that a new employee might be stealing funds. "I have no proof," she says, "but I'm fairly certain that the January 31, 2019, undeposited receipts amounted to more than $12,000, although the January 31 bank reconciliation prepared by the cashier (who works in the treasurer's department) shows only $7,238.40. Also, the January bank reconciliation doesn't show several checks that have been outstanding for a long time. The cashier told me that these checks needn't appear on the reconciliation because he had notified the bank to stop payment on them and he had made the necessary adjustment on the books. Does that sound reasonable to you?" At your request, Kate shows you the following (unaudited) January 31, 2019, bank reconciliation prepared by the cashier: Kate's Cards KATE'S CARDS Bank Reconciliation January 31, 2019 Ending balance from bank statement... Add: Deposits in transit... $ 4,843.69 Balance from general ledger 7,238.40 $10,893.89 $12,082.09 Less: Outstanding checks: No. 2351 Less: Bank service charge.. Unrecorded credit. 60.00 $1,100.20 No. 2353 1,200.00 (1,260.00) 578.32 No. 2354 969.68 (2,448.20) Reconciled cash balance. $ 9,633.89 Reconiled cash balance .... $ 9,633.89 You discover that the $1,200 unrecorded bank credit represents a note collected by the bank on Kate's behalf; it appears in the deposits column of the January bank statement. Your investigation also reveals that the December 31, 2018, bank reconciliation showed three checks that had been outstanding longer than 10 months: No. 1432 for $600, No. 1458 for $466.90, and No. 1512 for $253.10. You also discover that these items were never added back into the Cash account in Kate's books. In confirming that the checks shown on the cashier's January 31 bank reconciliation were outstanding on that date, you discover that check No. 2353 was actually a payment of $1,658.32 and had been recorded on the books for that amount. To confirm the amount of undeposited receipts at January 31, you request a bank statement for February 1-12 (called a cutoff bank statement). This indeed shows a January 1 deposit of $7,238.40.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter4: The Balance Sheet And The Statement Of Shareholders' Equity

Section: Chapter Questions

Problem 6C: You are the accountant for Speedy Company and are preparing the financial statements for 2019. Near...

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On February 15, 2019, Kate Collins, owner of Kate’s Cards, asks you to investigate the cash han-dling activities in her business. She believes that a new employee might be stealing funds. “I have no proof,” she says, “but I’m fairly certain that the January 31, 2019, undeposited receipts amounted to more than $12,000, although the January 31 bank reconciliation prepared by the cashier (who works in the treasurer’s department) shows only $7,238.40. Also, the January bank reconciliation doesn’t show several checks that have been outstanding for a long time. The cashier told me that these checks needn’t appear on the reconciliation because he had notified the bank to stop payment on them and he had made the necessary adjustment on the books. Does that sound reasonable to you?”At your request, Kate shows you the following (unaudited) January 31, 2019, bank reconciliation prepared by the cashier

You discover that the $1,200 unrecorded bank credit represents a note collected by the bank on Kate’s behalf; it appears in the deposits column of the January bank statement. Your investigation also reveals that the December 31, 2018, bank reconciliation showed three checks that had been outstanding longer than 10 months: No. 1432 for $600, No. 1458 for $466.90, and No. 1512 for $253.10. You also discover that these items were never added back into the Cash account in Kate’s books. In confirming that the checks shown on the cashier’s January 31 bank reconciliation were outstanding on that date, you discover that check No. 2353 was actually a payment of $1,658.32 and had been recorded on the books for that amount.To confirm the amount of undeposited receipts at January 31, you request a bank statement for February 1–12 (called a cutoff bank statement). This indeed shows a January 1 deposit of $7,238.40.

I have provided a excel spreadsheet that already has the Bank Reconciliation filled out however, I will need the corrected bank reconciliation filled out that is underneath along with the Description of Discrepancy and Value chart filled out as well.

Thank you

SERIAL PROBLEM: KATE's CARDS
(Note: This is a continuation of the Serial Problem: Kate's Cards from Chapters I through 6.)
SP7. On February 15, 2019, Kate Collins, owner of Kate's Cards, asks you to investigate the cash han-
dling activities in her business. She believes that a new employee might be stealing funds. "I have no
proof," she says, “but I'm fairly certain that the January 31, 2019, undeposited receipts amounted to
more than $12,000, although the January 31 bank reconciliation prepared by the cashier (who works
in the treasurer's department) shows only $7,238.40. Also, the January bank reconciliation doesn't
show several checks that have been outstanding for a long time. The cashier told me that these checks
Kate's
Cards
needn't appear on the reconciliation because he had notified the bank to stop payment on them and he
had made the necessary adjustment on the books. Does that sound reasonable to you?"
At your request, Kate shows you the following (unaudited) January 31, 2019, bank reconciliation
prepared by the cashier:
KATE'S CARDS
Bank Reconciliation
January 31, 2019
Ending balance from bank statement...
Add: Deposits in transit.
$ 4,843.69 Balance from general ledger ...
7,238.40
$10,893.89
$12,082.09
Less:
Less:
Outstanding checks:
No. 2351
Bank service charge..
Unrecorded credit.
$
1,200.00
60.00
$1,100.20
No. 2353
(1,260.00)
578.32
No. 2354
969.68
(2,448.20)
$ 9,633.89 Reconciled cash balance.....
Reconciled cash balance..
$ 9,633.89
You discover that the $1,200 unrecorded bank credit represents a note collected by the bank on
Kate's behalf; it appears in the deposits column of the January bank statement. Your investigation also
reveals that the December 31, 2018, bank reconciliation showed three checks that had been outstanding
longer than 10 months: No. 1432 for $600, No. 1458 for $466.90, and No. 1512 for $253.10. You also
discover that these items were never added back into the Cash account in Kate's books. In confirming
that the checks shown on the cashier's January 31 bank reconciliation were outstanding on that date,
you discover that check No. 2353 was actually a payment of $1,658.32 and had been recorded on the
books for that amount.
To confirm the amount of undeposited receipts at January 31, you request a bank statement for
February 1-12 (called a cutoff bank statement). This indeed shows a January 1 deposit of $7,238.40.

31-Jan
Ending Balance from Bank Statement
4,843.69
Balance from General Ledger
10,893.89
7,238.40
12,082.09
Add: Deposits not credited by bank
Add:
10,893.89
Less: Outstanding checks (list in numerical order)
2351
2353
2354
Less: Bank service charge
Unrecorded credit
60.00
No.
(1,260.00
1,100.20
|578.32
969.68
1,200.00
(2.448.20)
Reconciled Cash Balance
9,633.89
Reconciled Cash Balanoe
9,633.89
Kate's Cards
Corrected Bank Reconciliation
31-Jan
Ending Balance from Bank Statement
Balance from General Ledger
Add:
Add:
Subtotal
Less: Outstanding checks (list in numerical order)
Less:
1,080.00
No.
Reconciled Cash Balance
-
Reconciled Cash Balance
(1,080.00)
NOTE: There will be a difference here to reveal the fraud
concealedin the first reconcilation
Description of the Discrepancy
1
Value
2
3
4
6

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