13.2 Oliver, who owns a retail shop which is managed by Sykes, finds Sykes stealing from the shop till and dismisses him on 30 September 20X1, the accounting year end. Oliver then supplies the following information: 1.

30 September 20X0 30 September 20X2

£

£

Stock 8,250 10,375 Creditors - goods for resale 16,900

. 22,123 Trade debtors 1,260'

1,870 Cash float in till 200 Nil 2. During the year to 30 September 20X1, takings of £60,134 had been banked; the fol¬ lowing items were paid from takings before they were banked:

£

Oliver - Drawings 8,000 Sykes - Salary 4,000 Purchases for resale 1,365 Petty cash expenses 275 Wages £50 per week 3. During the year to 30 September 20X1, cheque payments to suppliers (all goods for resale) amounted to £55,537.

4. Oliver’s gross profit margin for the year is estimated at 40 per cent on cost.

Required:

(a) Compute the estimated amount of cash stolen by Sykes during the year to 30 September 20X1.

(b) Discuss three factors which could account for the estimate in

(a) being overstated.