Scenario:Daisey 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 book-keeper. 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 $18,380. Outstanding checks were No. 62 for $140.75, No. 183 for $180, No. 284 for $253.25, No. 862 for $190.71, No. 863 for $226.80, and No. 864 for $165.28. Included with the statement was a credit memorandum of $185 indicating the collection of a note receivable for Daisey Company by the bank on October 25.

This memorandum has not been recorded by Daisey.

The company's ledger showed one Cash account with a balance of $21,877.72. The balance included undepositied cash on hand. Because of the lack of internal controls, Bret took for personal use all of the undeposited receipts in excess of $3,795.51. He then prepared the following bank reconciliation in an effort to conceal his theft of cash:

Cash balance per books, October 31		$21,877.72
Add: Outstanding checks
No. 862	$190.71
No. 863	226.80
No. 864	165.28	482.79
		22,360.51
Less: Undeposited receipts		3,795.51
Unadjusted balance per bank, October 31		18,565.00
Less: Bank credit memorandum		185.00
Cash balance per bank statement, October 31		$18,380.00

Preparea 1,050-word bank reconciliation report (hint:deduct the amount of the theft from the adjusted balance per books) including the following:

• Indicate the three ways that Bret attempted to conceal the theft and the dollar amount involved in each method.
• What principles of internal control were violated in this case?

Showall work in the Excelspreadsheet andsubmitwith the reconciliation report.

MY ANSWER:
Cash Balance per BANK, October 31st	$ 18,380.00
Less: Outstanding Checks
No. 62	$ (140.75)
No. 183	$ (180.00)
No. 284	$ (253.25)
No.862	$ (190.71)
No.863	$ (226.80)
No.864	$ (165.28)	$ (1,156.79)
Adjusted balance per bank, October 31st	$ 17,223.21
Less: Bank credit memorandum	$ (185.00)
Less : Theft	$ (3,795.51)
Adjusted Balance	$ 13,242.70
Theft Amount:
Ommitted Checks amounting to ($140.75 + $180.00 + $253.25)	$ 574.00

Scenario: Daisey 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 book-keeper. 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 $18,380. Outstanding checks were No. 62 for $140.75, No. 183 for $180, No. 284 for $253.25, No. 862 for $190.71, No. 863 for $226.80, and No. 864 for $165.28. Included with the statement was a credit memorandum of $185 indicating the collection of a note receivable for Daisey Company by the bank on October 25. This memorandum has not been recorded by Daisey. The company's ledger showed one Cash account with a balance of $21,877.72. The balance included undepositied cash on hand. Because of the lack of internal controls, Bret took for personal use all of the undeposited receipts in excess of $3,795.51. He then prepared the following bank reconciliation in an effort to conceal his theft of cash: Cash Balance per BOOKS, October 31st Add: Outstanding Balance No. 862 No. 863 No. 864 $ 21,877.72 $ 190.71 $ 226.80 $ 165.28 Less: Undeposited Receipts Unadjusted balance perbank, October 31st Less: Bank credit memorandum Cash Balance per bank statement, October 31st $ $ $ $ $ $ 428.79 22,306.51 (3,795.51) 18,565.00 (185.00) 18,380.00 MY ANSWER: Cash Balance per BANK, October 31st Add: Outstanding Balance No. 62 No. 183 No. 284 No.862 No.863 No.864 Unadjusted balance perbank, October 31st Less: Bank credit memorandum Less : Thef Cash Balance per bank statement, October 31st $ 18,380.00 $ $ $ $ $ $ 140.75 180.00 253.25 190.71 226.80 165.28 $ $ $ $ $ 1,156.79 19,536.79 (185.00) (3,795.51) 15,556.28