Question: Pembrook Company had poor internal control over its cash transactions. The following are facts about its cash position on November 30: The cash books showed
Pembrook Company had poor internal control over its cash transactions. The following are facts about its cash position on November 30:
The cash books showed a balance of $18,901.62, which included undeposited receipts.
A credit of $100 on the bank statement did not appear on the company's books.
The balance, according to the bank statement, was $15,550.
Outstanding checks were:
no. 62 for $116.25
no. 183 for $150.00
no. 284 for $253.25
no. 8621 for $190.71
no. 8623 for $206.80
no. 8632 for $145.28.
The only deposit was in the amount of $3,794.41 on December 7.
The cashier handles all incoming cash and makes the bank deposits personally. He also reconciles the monthly bank statement. His November 30 reconciliation follows:
Balance, per books, November 30 $18,901.62
.png)
a. You suspect that the cashier may have misappropriated some money and are concerned specifically that some of the undeposited receipts of $3,794.41 may have been taken. Prepare a schedule showing your estimate of the loss.
b. How did the cashier attempt to conceal the theft?
c. If the cashier's October 31 reconciliation is known to be proper and you start your audit on December 10, what specific substantive audit procedures would help you discover the theft?
Add: Outstanding checks: 8621 8623 8632 $190.71 206.80 452844272 442.79 $19,344.41 3,794.41 Balance per bank, November 30 15,550.00 100.00 $15450.00 Less: Undeposited receipts Deduct: Unrecorded credit True cash, November 30
Step by Step Solution
3.41 Rating (176 Votes )
There are 3 Steps involved in it
a Schedule of Amount Taken by Cashier b It appears that the cashier removed 71950The most likely met... View full answer
Get step-by-step solutions from verified subject matter experts
Document Format (1 attachment)
330-B-A-A-B-R (1253).docx
120 KBs Word File
Study Help