Cullumber 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.

Problem 7-6A Cullumber 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, 2017, was $19,923.00. Outstanding checks were No. 62 for $144.00, No. 183 for $173.00, No. 284 for $300.00, No. 862 for $199.00, No. 863 for $264.00, and No. 864 for $211.00. Included with the statement was a credit memorandum of $190.00 indicating the collection of a note receivable for Cullumber Company by the bank on October 25. This memorandum has not been recorded by Cullumber The company's ledger showed one Cash account with a balance of $23,748.00. 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 $4,149.00. He then prepared the following bank reconciliation in an effort to conceal his theft of cash. Cash balance per books, October 31 Add: Outstanding checks $23,748.00 No. 862 No. 863 No. 864 $199.00 264.00 211.00 Less: Undeposited receipts Unadjusted balance per bank, October 31 Less: Bank credit memorandum Cash balance per bank statement, October 31 514.00 24,262.00 4,149.00 20,113.00 190.00 $19,923.00 (a) Prepare a correct bank reconciliation. (Hint: Deduct the amount of the theft from the adjusted balance per books.) (List items that increase balance as per bank 8 books first.)