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Blossom Company is a very profitable small business. It has not, however, given much consideration to internal control. For example, in an attempt to keep
Blossom Company is a very profitable small business. It has not, however, given much consideration to internal control. For example, in an attempt to keep clerical and office expenses to a minimum, the company has combined the jobs of cashier and bookkeeper. As a result, Bret Turrin handles all cash receipts, keeps the accounting records, and prepares the monthly bank reconciliations. The balance per the bank statement on October 31, 2022, was $19,285.00. Outstanding checks were No. 62 for $168.00, No. 183 for $174.00, No. 284 for $262.00, No. 862 for $196.00, No. 863 for $251.00, and No. 864 for $204.00. Included with the statement was a credit memorandum of $196.00 indicating the collection of a note receivable for Blossom Company by the bank on October 25. This memorandum has not been recorded by Blossom. The company's ledger showed one Cash account with a balance of $23,048.00. The balance included undeposited cash on hand. Because of the lack of internal controls, Bret took for personal use all of the undeposited receipts in excess of $4,108.00. He then prepared the following bank reconciliation in an effort to conceal his theft of cash. $23,048.00 Cash balance per books, October 31 Add: Outstanding checks No. 862 No. 863 $196.00 251.00 204.00 No. 864 541.00 23,589.00 Less: Undeposited receipts Unadjusted balance per bank, October 31 Less: Bank credit memorandum Cash balance per bank statement, October 31 4,108.00 19,481.00 196.00 $19,285.00 BLOSSOM COMPANY Bank Reconciliation $ A A $ A $ 8
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