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

image text in transcribedimage text in transcribedimage text in transcribed

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 $18,971.00. Outstanding checks were No. 62 for $160.00, No. 183 for $180.00, No. 284 for $269.00, No. 862 for $226.00, No. 863 for $228.00, and No. 864 for $182.00. Included with the statement was a credit memorandum of $230.00 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 company's ledger showed one Cash account with a balance of $22,564.00. 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 $3,819.00. He then prepared the following bank reconciliation in an effort to conceal his theft of cash. $22,564.00 Cash balance per books, October 31 Add: Outstanding checks No. 862 No. 863 No. 864 $226.00 228.00 182.00 456.00 Less: Undeposited receipts Unadjusted balance per bank, October 31 Less: Bank credit memorandum Cash balance per bank statement, October 31 23,020.00 3,819.00 19,201.00 230.00 $18,971.00 (a) Prepare a correct bank reconciliation. (Hint: Deduct the amount of the theft from the adjusted balance per books.) (List items that increase ba per bank & books first.) SANDHILL COMPANY Bank Reconciliation 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 $18,971.00. Outstanding checks were No. 62 for $160.00, No. 183 for $180.00, No. 284 for $269.00, No. 862 for $226.00, No. 863 for $228.00, and No. 864 for $182.00. Included with the statement was a credit memorandum of $230.00 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 company's ledger showed one Cash account with a balance of $22,564.00. 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 $3,819.00. He then prepared the following bank reconciliation in an effort to conceal his theft of cash. $22,564.00 Cash balance per books, October 31 Add: Outstanding checks No. 862 No. 863 No. 864 $226.00 228.00 182.00 456.00 Less: Undeposited receipts Unadjusted balance per bank, October 31 Less: Bank credit memorandum Cash balance per bank statement, October 31 23,020.00 3,819.00 19,201.00 230.00 $18,971.00 (a) Prepare a correct bank reconciliation. (Hint: Deduct the amount of the theft from the adjusted balance per books.) (List items that increase ba per bank & books first.) SANDHILL COMPANY Bank Reconciliation

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

Internal Auditing Principles And Techniques

Authors: Richard L. Ratliff, W. Wallace, Walter B. Mcfarland, J. Loeboecke

2nd Edition

0894133268, 978-0894133268

More Books

Students also viewed these Accounting questions

Question

Draw a schematic diagram of I.C. engines and name the parts.

Answered: 1 week ago

Question

What are some global issues confronting women?

Answered: 1 week ago