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Using bank reconciliation to determine cash receipts stolen Alaska Impressions Co. records all cash receipts on the basis of its cash register tapes. Alaska Impressions discovered during October 20Y3 that one of its sales clerks had stolen an undetermined amount of cash receipts by taking the daily deposits to the bank. The following data have been gathered for October: No deposits were in transit on October 31. A. Determine the amount of cash receipts stolen by the sales clerk. B. What accounting controls would have prevented or detected this theft?
Financial And Managerial Accounting
Solutions
Financial And Managerial Accounting
Using bank reconciliation to determine cash receipts stolen
Alaska Impressions Co. records all cash receipts on the basis of its cash register tapes. Alaska Impressions discovered during October 20Y3 that one of its sales clerks had stolen an undetermined amount of cash receipts by taking the daily deposits to the bank. The following data have been gathered for October:
No deposits were in transit on October 31.
- A. Determine the amount of cash receipts stolen by the sales clerk.
- B. What accounting controls would have prevented or detected this theft?
(a)
Calculate the amount of cash receipts stolen by the sales clerk.
Explanation of Solution
Bank Reconciliation Statement: Bank statement is prepared by bank. The company maintains its own records from its perspective. This is why the cash balance per bank and cash balance per books seldom agree. Bank reconciliation is the statement prepared by company to remove the differences and disagreement between cash balance per bank and cash balance per books.
Calculate the amount of cash receipts stolen by the sales clerk.
Step 1: Prepare bank reconciliation statement.
|
Company C Bank Reconciliation August 31 | ||
| Particulars | Amount ($) | Amount ($) |
| Cash balance according to bank statement | 13,275 | |
| Deduct: Outstanding checks | 3,670 | |
| Adjusted balance | 9,605 | |
| Cash balance according to company’s records | ||
(b)
Identify the internal controls that could have prevented or detected the theft.
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