Regwired . Prepare the June bank reconciliation b. Prepare any necessary adjusting entries. Is from Chapters I through 6.) SERIAL PROBLEM: KATE'S CARDS i to investigate the cash (Note: This is a continuation of the Serial Problem: Kate's Cards from Chapters / thre EYE aling funds. "have eceipts am ne cashier (who works SP7. Rates Cards bank reconciliation does Id me that these checo On February 15, 2019. Kate Collins, owner of Kate's Cards, asks you to in dling activities in her business. She believes that a new employee might be stealine proof," she says, "but I'm fairly certain that the January 31, 2019, undeposi more than $12.000, although the January 31 bank reconciliation prepared by the cas in the treasurer's department) shows only $7.238.40. Also, the January bank re show several checks that have been outstanding for a long time. The cashier told me needn't an ear on the reconciliation because he had notified the bank to stop payment had made the necessary adjustment on the books. Does that sound reasonable to you At your request, Kate shows you the following (unaudited) January 31, 2019, bank rece prepared by the cashier: out on them ante 1. 2019, bank reconciliation Ending balance from bank statement... Add: Deposits in transit....... .. $10,893.89 KATE'S CARDS Bank Reconciliation January 31, 2019 $ 4,843.69 Balance from general ledger ... 7,238.40 $12,082.09 Less: Bank service charge. . . . . . . . $ 60.00 Unrecorded credit ......... 1,200.00 Less: Outstanding checks: No. 2351.. No. 2353.. No. 2354 Reconciled cash balance......... $1,100.20 578.32 969.68 (1.260.00 (2,448.20) $ 9,633.89 Reconciled cash balance . . . . . . $ 9,633B ambridge Business PUDISHUS Chapter 7 Internal Control and Cash 367 You discover that the $1,200 unrecorded bank credit renresents a note collected by the bank on Kate's behalf; it appears in the deposits column of the January hank statement. Your investigation also neveals that the December 31, 2018, bank reconciliation showed three checks that had been outstanding longer than 10 months: No. 1432 for $600, No. 1458 for $466.90, and No. 1512 for $253.10. You also discover that these items were never added back into the Cash account in Kate's books. In confirming that the checks shown on the cashier's January 31 bank reconciliation were outstanding on that date, you discover that check No. 2353 was actually a payment of $1,658.32 and had been recorded on the books for that amount. To confirm the amount of undeposited receipts at January 31, you request a bank statement for February 1-12 (called a cutoff bank statement). This indeed shows a January 1 deposit of $7,238.40. Required a. Calculate the amount of funds stolen by the employee. b. Describe how the employee concealed the theft. c. What suggestions would you make to Kate about cash control procedures? NG YOUR KNOWLEDGE
