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 |
| 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 |
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 (see attached file) and submit with the reconciliation report.
Submit both Excel and Word Document of the 1,050 word paper (make sure its according to the APA format, and use in-text citation according tot he references used).
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Explanation & Answer
hello buddyattached is the completed work. Please go through it and get to me should you have further concerns or need any clarifications.regards buddy
Running Head: Comprehensive Bank Reconciliation Document
Comprehensive Bank Reconciliation Document
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Comprehensive Bank Reconciliation Document
The Bank reconciliation statement is among the essential documents that are prepared by
business organizations regardless of their size. This is done so in a bid to match the cash balance
of the bank statement with the balance on the company's financial books. Reconciliations help in
detection and prevention of fraud (either intentional or unintentional), along with errors
committed by bank employees, accountants, company employees and management (Shah 2013).
The duration and frequency of its preparation vary; at times it can be done monthly although if it
is an organization with a smaller cash resource, it can be done daily. The bank reconciliation
statements help in the detection of fraud, prevention of overdrafts and in identification of bank
errors. (Taylor 2016)
In the books of Daisey Company, the records of the money that is received and that paid
out is done in the bank columns of the cashbook. The same time the bank will be recording the
flow of cash in and out of the business account. If in any case all the transactions that are made
in the cash book are the equivalent to those records that are in the bank, then the balances of
both would be similar and no discrepancies would be noted. This is a unique situation since at
items the payment of items is done through the current account and the records not put in the
cashbook. To establish whether books of accounts are in reconciliation, Bret Turrin should do a
comparison of the cashbook entries and balances that are held in the bank. The bank regularly
sends a bank statement, and as the accounts clerk he should ke...
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