$10,400 Cash balance per books, July 31 Add outstanding checks: No. 5148 $225 5149 750 5151 800 1,675 $12,075 Less undeposited receipts Cash balance per bank, July 31 Deduct unrecorded note with interest . True cash, July 31....... 1,500 $10,575 2,400 $ 8,175 Calculator Tape of Outstanding Checks: 0* 225+ 750+ 800+ 1,675*
The records of Parker Company indicate a July 31 cash balance of $10,400, which includes undeposited receipts for July 30 and 31. The cash balance on the bank statement as of July 31 is $10,575. This balance includes a note of $2,250 plus $150 interest collected by the bank but not recorded in the journal. Checks outstanding on July 31 were as follows: No. 2670, $1,050; No. 3679, $675; No. 3690, $1,650; No. 5148, $225; No. 5149, $750; and No. 5151, $800.
On July 25, the cashier resigned, effective at the end of the month. Before leaving on July 31, the cashier prepared the following bank reconciliation:
Subsequently, the owner of Parker Company discovered that the cashier had stolen an unknown amount of undeposited receipts, leaving only $1,500 to be deposited on July 31. The owner, a close family friend, has asked for your help in determining the amount that the former cashier stole.
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Determine the amount the cashier stole from Parker Company. Show your computations in good form.
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How did the cashier attempt to conceal the theft?
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Identify two major weaknesses in internal controls that allowed the cashier to steal the undeposited cash receipts.
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Recommend improvements in internal controls so that similar types of thefts of undeposited cash receipts can be prevented.
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