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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?

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Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663

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Chapter
Section
BuyFindarrow_forward

Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663
Chapter 7, Problem 23E
Textbook Problem
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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:

Chapter 7, Problem 23E, Using bank reconciliation to determine cash receipts stolen Alaska Impressions Co. records all cash

No deposits were in transit on October 31.

  1. A. Determine the amount of cash receipts stolen by the sales clerk.
  2. B. What accounting controls would have prevented or detected this theft?

(a)

To determine

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)

To determine

Identify the internal controls that could have prevented or detected the theft.

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Chapter 7 Solutions

Financial And Managerial Accounting
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