Week5 Internal Controls and Cash II


Question Description

Purpose of Assignment

Reconciling bank accounts is a good way to help maintain internal controls over cash. With time lags and posting errors it is easy for cash transactions to be omitted, recorded in a different accounting period, or reflect incorrect amounts. This assignment with give you practical experience in reconciling the cash balance as noted on the company books to the bank's records.

Assignment Steps

Resources: Financial Accounting: Tools for Business Decision Making

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
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

Prepare a 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?

Show all work in the Excel® spreadsheet and submit with the reconciliation report.

Unformatted Attachment Preview

Name Section Date Problem 7-8A Daisey Company (a) DAISEY COMPANY Bank Reconciliation October 31, 2017 No. Amount No. Amount (b) and (c) (b) (c) 418 ...
Purchase answer to see full attachment

Tutor Answer

School: University of Virginia

hi Rocki The paper is ready.

Surname [1]
Student’s Name
Professor’s Name
20 February 2017
Bank Reconciliation Report.
Among the numerous objectives of an organization, is to maximize profits through the
minimization of costs. Often, some of the costs are internal. Occasionally, the costs are as a
result of errors in recording transactions or even theft of cash. Consequently, it is necessary for
an organization to reconcile its financial books through qualified personnel. Reconciliation is the
process of comparing recorded transactions against the bank statements.
Through cash reconciliation, it is easier to identify discrepancies caused by either, errors,
employee theft, software malfunctions, or electronic charges. Through reconciliation, the
organization is able to timely correct any errors and other irregularities. Also, reconciliation
allows timely adjustments for deposits and charges.
Finally, after identifying reconciliation as the remedy for internal cash control, it is important to
follow the appropriate reconciliation steps. First, reconcile the total receipts for the stipulated
period against the total deposits. Confirm that the interest earned is receipted. Second, compare
the total disbursements to the total claims. This is done by ensuring that the bank fees are entered
in the accounting records. By following the steps, the auditor is assured of subjective ...

flag Report DMCA

The tutor managed to follow the requirements for my assignment and helped me understand the concepts on it.

The tutor was knowledgeable, will be using the service again.

Awesome quality of the tutor. They were helpful and accommodating given my needs.

Similar Questions
Related Tags

Brown University

1271 Tutors

California Institute of Technology

2131 Tutors

Carnegie Mellon University

982 Tutors

Columbia University

1256 Tutors

Dartmouth University

2113 Tutors

Emory University

2279 Tutors

Harvard University

599 Tutors

Massachusetts Institute of Technology

2319 Tutors

New York University

1645 Tutors

Notre Dam University

1911 Tutors

Oklahoma University

2122 Tutors

Pennsylvania State University

932 Tutors

Princeton University

1211 Tutors

Stanford University

983 Tutors

University of California

1282 Tutors

Oxford University

123 Tutors

Yale University

2325 Tutors