SARBANES-OXLEY, INTERNAL CONTROL, AND CASH
The March 2014 bank reconciliation, detailed below, was incorrectly prepared (NOTE: the descriptions and amounts of the listed items are correct).
Because the bank reconciliation did not balance, the ledger account balances provided (in the form of T-accounts) are shown BEFORE the bank
reconciliation journal entries were posted. The financial statements were left unfinished as well.
Your Challenge today is to:
	1	Prepare a correct bank reconciliation (the form is provided on the following page).
	2	Prepare the necessary journal entries stemming from the correctly prepared bank reconciliation. Be sure to include proper dates
			AND explanations for each journal entry.
	3	Post the journal entries you prepared to the ledger using the T-accounts provided.
	4	Correctly complete the incomplete financial statements.
	5	Answer the questions below.
Steggo Corporation
Bank Reconciliation
March 31, 2014
Cash balance according to bank statement								$	11708		Cash balance according to companys books							$	16659
Add:	Check from customer to pay on A/R, returned										Add:	Proceeds of note collected by bank
		by customer's bank as NSF							1976				Principal	$	3000
									13684				Interest		120	$	3120
												Bank service charges					75		3195
Deduct:	Deposits in transit on March 31					$	9460												19854
	Error in March 10 deposit. Deposit
		was for actual cash sales of									Deduct:	Outstanding checks
		$9,765. Deposit was recorded											No.		854		600
		correctly by the bank but													862		884
		incorrectly in journal as $7,965					1800		11260						863		156
																			1640
Updated cash balance								$	2424		Updated cash balance							$	18214
5.	QUESTIONS
		How would the financial statements be affected if you did not post the journal entries from the bank reconciliation to the ledger?
		Income Statement			Understated/Overstated/No Change							Balance Sheet			Understated/Overstated/No Change
		Total revenue										Total assets
		Total expenses										Total liabilities
		Net income										Total stockholders' equity

Bank Rec Blank Recon LedgerNew FS Neww 4. COMPLETE FINANCIAL STATEMENTS Steggo Corporation Income Statement For the Three Months Ended March 31, 2014 Revenue from sales Sales Less: Sales returns and allowances Sales discounts 3400 1100 4500 Net sales Cost of goods sold 109500 Gross profit Operating expenses Selling expenses Sales salaries expense Depreciation expense - store equip Advertising expense 38000 8000 4890 Total selling expenses 50890 Administrative expenses Insurance expense Rent expense Office supplies expense Bank fee expense 12000 9600 1250 Total administrative epxenses Total operating expenses Income from operations Other income and expense:s Interest revenue Net income Steggo Corporation Retained Earnings Statement For the Three Months Ended March 31, 2014 Retained earnings, Net income Less dividends Increase in retained earnings Retained earnings, Steggo Corporation Balance Sheet March 31, 2014 Assets Liabilities Current assets Current liabilities Cash Accounts receivable Accounts payable N/P - current portion 4100 2000 Notes receivable Merchandise inventory Office supplies Prepaid insurance Total current liabilities 6100 14700 250 200 Long-term liabilitie:s Notes payable 5500 Total current assets Total long-term liabilities 5500