Question Curvey Company is a very profitable small business. It has not, however, given much consideration to internal control. For example, to keep clerical and office expenses to a minimum, the company has combined the jobs of cashier and bookkeeper. They had a staff previously, James who handles all cash receipts, keeps the accounting records, and prepares the monthly bank statement. However, he was no longer with the company. A new account executive, Mimi has been appointed. Year 2020: The bank portion of the bank reconciliation for Curvey Company at October 31, 2020, was as follows. Curvey Company, Bank Reconciliation 31 October 2020 Cash balance per bank Add: Deposits in transit RM 6,000 842 6,842 Less: Outstanding cheques Cheque Number 2451 2470 2471 2472 2474 Adjusted cash balance per bank Cheque Amount 700 396 464 270 578 2,408 4,434 The adjusted cash balance per bank agreed with the cash balance per books at October 31, 2020. The November 2020 bank statement showed the following cheques and deposits: Bank Statement Date 1 2 5 4 8 10 15 18 27 30 29 Cheques Deposits Number Amount Date Amount 2470 3961 842 2471 4644 666 2474 5788 545 2475 903 13 1,416 2476 1,556 | 18 810 2477 330 21 1,624 2479 98025 1,412 2480 714 28 908 2481 382 30 652 2483 317 Total 8,875 2486 495 Total 7,115 --- For cash records per books for November 2020 showed the following. Cash Payments Journal Cash Receipts Journal Date Number Amount Date Number Amount Date Amount (RM) (RM) (RM) 1 2475 903 20 2483 317 3 666 2 2476 1,556 22 2484 460 7 545 2 2477 330 | 23 2485 525 12 1,416 4 2478 300 24 2486 495 17 810 8 2479 89029 2487 210 20 1,642 10 2480 714 30 2488 635 24 1,412 15 2481 382 Total 8,067 27 908 18 2482 350 29 652 30 1,541 Total 9,592 . 1 The bank statement contained two bank memoranda: 1. A credit of RM1,375 for the collection of a RM1,300 note for Curvey Company plus interest of RM91 and less a collection fee of RM16. Curvey Company has not accrued any interest on the note. 2. A debit for the printing of additional company cheques RM34. At November 30, 2020, the cash balance per books was RM5,958. The bank did not make any errors, but two errors were made by Curvey Company. Required: (a) (b) Prepare a bank reconciliation statement at November 30, 2020. Show the updated Cash Book account. (20 marks) Prepare the adjusting entries based on the reconciliation (Hint: The correction of any errors pertaining to recording cheques should be made to Accounts Payable. The correction of any errors relating to recording cash receipts should be made to Accounts Receivable. (10 marks) Year 2019: The balance per bank statement last year, on October 31 2019, was RM15,313. Outstanding cheques were: No. 62 for RM107.74, no. 183 for RM127.50, no. 284 for RM215.26, no. 862 for RM132.10, no. 863 for RM192.78, and no. 864 for RM140.49. Included with the statement was a credit memorandum of RM460 indicating the collection of a note receivable for Curvey by the bank on October 25. This memorandum has not been recorded by Curvey Company. The company's ledger showed one cash account with a balance of RM18,608.81. the balance included undeposited cash on hand. Because of the lack of internal controls, James took for personal use all of the undeposited receipts in excess of RM3,226.18. He then prepared the following bank reconciliation to conceal his theft of cash. RM 18,608.81 Curvey Company Bank Reconciliation 31 October 2019 RM Cash balance per books Add: Outstanding cheques Cheque Number Cheque Amount No. 862 132.10 No. 863 192.78 No. 864 140.49 Less: Undeposited receipts Unadjusted balance per bank Less: Bank credit memorandum Cash balance per bank statement 390.37 18,999.18 3.226.18 15,773.00 460.00 15,313.00 Required: (a) Indicate THREE (3) ways that James attempted to conceal the theft and the dollar amount pertaining to each method. (6 marks) (b) What principles of internal control were violated in this case? (4 marks)