Problem 7-6A

Bank Reconciliation

Problem 7-6A Oriole 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 $18,496.00. Outstanding checks were No. 62 for $162.00, No. 183 for $170.00, No. 284 for $258.00, No. 862 for $221.00, No. 863 for $260.00, and No. 864 for $205.00. Included with the statement was a credit memorandum of $236.00 indicating the collection of a note receivable for Oriole Company by the bank on October 25. This memorandum has not been recorded by Oriole. The company's ledger showed one Cash account with a balance of $22,090.00. 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 $3,934.00. He then prepared the following bank reconciliation in an effort to conceal his theft of cash. $22,090.00 Cash balance per books, October 31 Add: Outstanding checks No. 862 No. 863 $221.00 260.00 205.00 No. 8 864 Less: Undeposited receipts Unadjusted balance per bank, October 31 Less: Bank credit memorandum Cash balance per bank statement, October 31 576.00 22,666.00 3,934.00 18,732.00 236.00 $18,496.00 (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 & books first.) ORIOLE COMPANY Bank Reconciliation