Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Sandhill Company is a very profitable small business. It has not, however, given much consideration to internal control. For example, in an attempt to keep

Sandhill 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 $19,052.00. Outstanding checks were No. 62 for $168.00, No. 183 for $172.00, No. 284 for $283.00, No. 862 for $229.00, No. 863 for $277.00, and No. 864 for $208.00. Included with the statement was a credit memorandum of $228.00 indicating the collection of a note receivable for Sandhill Company by the bank on October 25. This memorandum has not been recorded by Sandhill. The companys ledger showed one Cash account with a balance of $22,814.00. 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 $4,148.00. He then prepared the following bank reconciliation in an effort to conceal his theft of cash.

Cash balance per books, October 31 $22,814.00
Add: Outstanding checks
No. 862 $229.00
No. 863 277.00
No. 864

208.00

614.00

23,428.00
Less: Undeposited receipts

4,148.00

Unadjusted balance per bank, October 31 19,280.00
Less: Bank credit memorandum

228.00

Cash balance per bank statement, October 31

$19,052.00

(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.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting

Authors: Charles T. Horngren, Walter T. Harrison Jr., M. Suzanne Oliv

9th Edition

130898414, 9780132997379, 978-0130898418, 132997371, 978-0132569309

More Books

Students also viewed these Accounting questions