Pharoah 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 $$20,286\mathrm{.}00.$ Outstanding checks were No$.62$ for $$166\mathrm{.}00,$ No$.183$ for $$178\mathrm{.}00,$ No$.284$ for $$291\mathrm{.}00,$ No$.862$ for $$200\mathrm{.}00,$ No$.863$ for $$275\mathrm{.}00,$ and No$.864$ for $$212\mathrm{.}00.$ Included with the statement was a credit memorandum of $$203\mathrm{.}00$ indicating the collection of a note receivable for Pharoah Company by the bank on October $25.$ This memorandum has not been recorded by Pharoah.

The company$$s ledger showed one Cash account with a balance of $$23,744\mathrm{.}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 $$3,832\mathrm{.}00.$ He then prepared the following bank reconciliation in an effort to conceal his theft of cash.

Cash balance per books, October $31$

$$23,744\mathrm{.}00$

Add: Outstanding checks

No$.862$

$$200\mathrm{.}00$

No$.863$

$275\mathrm{.}00$

No$.864$

$212\mathrm{.}00$

$577\mathrm{.}00$

$24,321\mathrm{.}00$

Less: Undeposited receipts

$3,832\mathrm{.}00$

Unadjusted balance per bank, October $31$

$20,489\mathrm{.}00$

Less: Bank credit memorandum

$203\mathrm{.}00$

Cash balance per bank statement, October $31$

$$20,286\mathrm{.}00$PHAROAHCOMPANY

Bank Reconciliation

$

$$: $$:

$

$

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