Constance Hermaine manages Springfield Manufacturing. Hermaine fears that a trusted employee has been stealing from the company. This employee receives cash from clients and also prepares the monthly bank reconciliation. To check up on the employee, Hermaine prepares her own bank reconciliation, as follows:

Does it appear that the employee has stolen from the company? If so, how much? Explain your answer. Which side of the bank reconciliation shows the company’s true cash balance?

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A1 Springfield Manufacturing Bank Reconciliation May 31, 2018 Bank 3 Balance, May 31 4 Add: Deposits in transit Books 2 $ 4,200 Balance, May 31 |Add: $ 4,120 Bank collections 700 1200 10 Interest revenue Less: (860) 7 Less: Outstanding checks 9 Adjusted bank balance 10 Service charge $ 4,040 Adjusted book balance (40) I$ 5,290 8