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. 1. Determine the amount the cashier stole from Parker Company. Show your computations in good form. 2. How did the cashier attempt to conceal the theft? 3. a. Identify two major weaknesses in internal controls that allowed the cashier to steal the undeposited cash receipts. b. Recommend improvements in internal controls so that similar types of thefts of undeposited cash receipts can be prevented.

BuyFind

Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124
BuyFind

Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124

Solutions

Chapter
Section
Chapter 8, Problem 8CP
Textbook Problem

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:

Chapter 8, Problem 8CP, The records of Parker Company indicate a July 31 cash balance of 10,400, which includes undeposited , example  1

Chapter 8, Problem 8CP, The records of Parker Company indicate a July 31 cash balance of 10,400, which includes undeposited , example  2

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.

  1. 1. Determine the amount the cashier stole from Parker Company. Show your computations in good form.
  2. 2. How did the cashier attempt to conceal the theft?
    1. 3. a. Identify two major weaknesses in internal controls that allowed the cashier to steal the undeposited cash receipts.

      b. Chapter 8, Problem 8CP, The records of Parker Company indicate a July 31 cash balance of 10,400, which includes undeposited , example  3 Recommend improvements in internal controls so that similar types of thefts of undeposited cash receipts can be prevented.

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Chapter 8 Solutions

Financial Accounting
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