10-27. Henry Mills is responsible for preparing checks, recording cash disbursements, and preparing bank reconciliations for Signet Corporation. While reconciling the October bank statement, Mills noticed that several checks totaling $937 had been outstanding for more than one year. Concluding that these checks would never be presented for payments, Mills prepared a check for $937 payable to himself, forged the treasurer's signature, and cashed the check. Mills made no entry in the accounts for this disbursement and attempted to conceal the theft by destroying the forged check and omitting the long-outstanding checks from subsequent bank reconciliations. a. Identify the weaknesses in Signet Corporation's internal control. b. Explain several audit procedures that might disclose the fraudulent disbursement.

10-27. Henry Mills is responsible for preparing checks, recording cash disbursements, and preparing bank reconciliations for Signet Corporation. While reconciling the October bank statement, Mills noticed that several checks totaling $937 had been outstanding for more than one year. Concluding that these checks would never be presented for payments, Mills prepared a check for $937 payable to himself, forged the treasurer's signature, and cashed the check. Mills made no entry in the accounts for this disbursement and attempted to conceal the theft by destroying the forged check and omitting the long-outstanding checks from subsequent bank reconciliations. a. Identify the weaknesses in Signet Corporation's internal control. b. Explain several audit procedures that might disclose the fraudulent disbursement.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

.
9-13. David Cassadore received his bank statement and canceled checks for the. Ending November 20th. he compared the check register (Figure 4.9a) with the canceled checks and deposits listed in the statement (Figure 4.9b). Then, he placed a check mark next to the items he processed. He reconciled the bank statement (Figure 4.9c) Figure 4.9b: Bank Statement Sky Bank David Cassadore 255 West Ash Red Lodge, Montana Trans. Type or Check No. 9 Date 11/04 047 048 049 Check Date Amount Check 047 11/3 47.29 10/20 11/20 Date Statement Period 10/20 through 11/20 11/03 11/04 Deposit 11/09 General Telephone Co. 11/15 Cash 11/20 Deposit 11/20 Consumer Power Co. DAILY BALANCE Daily Balance Daily Balance 10/20 389.49 11/04 742.20 11/15 11/30 342.20 11/09 704.85 11/20 Country Pride 048 11/09 37.35 Description of Transaction DEPOSITS/CREDITS Amount Description Date Amount 400.00 Deposit 11/15 50.00 Monthly Statement Previous Balance 1 Deposit 3 Withdrawals Service Charge Interest Earned Present Balance…
The cash account for Norwegian Medical Co. at April 30 indicated a balance of $12,195. The bank statement indicated a balance of $13,760 on April 30. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items: Checks outstanding totaled $4,950. A deposit of $5,160, representing receipts of April 30, had been made too late to appear on the bank statement. The bank collected $2,680 on a $2,550 note, including interest of $130. A check for $660 returned with the statement had been incorrectly recorded by Norwegian Medical Co. as $600. The check was for the payment of an obligation to Universal Supply Co. for a purchase on account. A check drawn for $90 had been erroneously charged by the bank as $900. Bank service charges for April amounted to $35. Required: Question Content Area 1. Prepare a bank reconciliation. Norwegian Medical Co.Bank ReconciliationApril 30 Cash balance according to bank statement…
The bookkeeper at Jefferson Company has not reconciled the bank statement with the Cash account, saying, "I don't have time." You have been asked to prepare a reconciliation and review the procedures with the bookkeeper. The April 30, Current Year, bank statement and the April ledger account for cash showed the following (summarized): Balance, April 1, Current Year Deposits during April Interest collected Checks cleared during April NSF check-A. B. Wright Bank service charges BANK STATEMENT Checks Deposits Balance $32,200 $36,500 68,700 1,280 69,980 $46,400 23,580 250 23,330 170 23,160 23,160 Balance, April 30, Current Year Cash (A) April 1 Debit Balance April Deposits Credit 24,000 April Checks written 42,200 44,600 A comparison of checks written before and during April with the checks cleared through the bank showed outstanding checks at the end of April of $6,400 (including $4,600 written before and $1,800 written during April). No deposits in transit were carried over from March,…
The June 30 bank statement shows a balance of $7,100. The following information as discovered while the bank reconciliation was prepared: A bookkeeper error where a $400 check written to a supplier was incorrectly recorded as $500 Two outstanding checks totaling $840 A bank service charge of $29 A deposit in transit of $330 Bank interest revenue of $20 What is the adjusted bank balance?
Alaska Impressions Co. records all cash receipts on the basis of its cash register tapes. Alaska Impressions discovered during October 20Y3 that one of its sales clerks had stolen an undetermined amount of cash receipts by taking the daily deposits to the bank. The following data have been gathered for October: Cash in bank according to the general ledger $12,700 Cash according to the October 31, 20Y3, bank statement 13,530 Outstanding checks as of October 31, 20Y3 3,660 Bank service charge for October 40 Note receivable, including interest collected by bank in October 2,020 No deposits were in transit on October 31. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. Open spreadsheet a. Determine the amount of cash receipts stolen by the sales clerk, Round your answer to the nearest dollar. 4,810 b. What accounting controls would have prevented or detected this…
Alaska Impressions Co. records all cash receipts on the basis of its cash register tapes. Alaska Impressions discovered during October 20Y3 that one of its sales clerks had stolen an undetermined amount of cash receipts by taking the daily deposits to the bank. The following data have been gathered for October: Cash in bank according to the general ledger $12,620 Cash according to the October 31, 20Y3, bank statement 12,990 Outstanding checks as of October 31, 20Y3 3,340 Bank service charge for October 35 Note receivable, including interest collected by bank in October 2,260 No deposits were in transit on October 31. A. Determine the amount of cash receipts stolen by the sales clerk. B. What accounting controls would have prevented or detected this theft? Cash receipts stolen A. Determine the amount of cash receipts stolen by the sales clerk. Final question B. What accounting controls would have prevented or…
The cash account for Norwegian Medical Co. at April 30 indicated a balance of $8,680. The bank statement indicated a balance of $10,060 on April 30. Comparing the bank statement and the accompanying canceled checks and memos with the records revealed the following reconciling items: Checks outstanding totaled $3,620. A deposit of $3,770, representing receipts of April 30, had been made too late to appear on the bank statement. The bank collected $1,960 on a $1,860 note, including interest of $100. A check for $550 returned with the statement had been incorrectly recorded by Norwegian Medical Co. as $500. The check was for the payment of an obligation to Universal Supply Co. for a purchase on account. A check drawn for $40 had been erroneously charged by the bank as $400. Bank service charges for April amounted to $20. Required: Question Content Area 1. Prepare a bank reconciliation.
During the bank reconciliation process at Fontes & Barone Consulting, LLP, on May 2, 20X1, the following two errors were discovered in the firm's records. a. The checkbook and the general journal indicated that Check 2206 dated April 17 was issued for $696 to make a cash purchase of supplies. However, examination of the canceled check and the listing on the bank statement showed that the actual amount of the check was $96. b. The checkbook and the general journal indicated that Check 2247 dated April 20 was issued for $140 to pay a utility bill. However, examination of the canceled check and the listing on the bank statement showed that the actual amount of the check was $410. Required: 1. Prepare the adjusted book balance section of the firm's bank reconciliation statement as of April 30, 20X1. The book balance as of April 30 was $25,275. The errors listed above are the only two items that affect the book balance. 2. Prepare general journal entries to correct the errors. Check 2206…
2. Nicole has asked you to prepare a bank reconciliation for NGS. According to her records, NGS's cash balance is $6,000 at December 31, but the bank reports a balance of $5,500. a. The bank deducted $250 for an NSF check from a customer deposited on December 22 b. NGS has written checks totaling $3,500 that have not yet cleared the bank. c. The bank added $10 cash to the account for interest earned in December. d. NGS made a $3.480 deposit on December 31, which will be recorded by the bank in January. The bank deducted $10 for service charges. f. NGS wrote a check to a supplier on account for $300 but mistakenly recorded it as $30. NICOLE'S GETAWAY SPA Bank Reconciliation At December 31 Bank Statement Company's Books Ending Balance per Bank Statemer Ending alance per Cash Account Additions: Additions: Deductions: Deductions: Up-to-Date Cash Balance Up-to-Date Cash Balance
Alaska Impressions Co. records all cash receipts on the basis of its cash register tapes. Alaska Impressions discovered during October 20Y3 that one of its sales clerks had stolen an undetermined amount of cash receipts by taking the daily deposits to the bank. The following data have been gathered for October: Cash in bank according to the general ledger $6,110 Cash according to the October 31, 20Y3, bank statement 14,115 Outstanding checks as of October 31, 20Y3 4,035 Bank service charge for October 20 Note receivable, including interest collected by bank in October 6,540 No deposits were in transit on October 31. a. Determine the amount of cash receipts stolen by the sales clerk.
The following data were accumulated for use in reconciling the bank account of Creative Design Co. for August 20Y6: Cash balance according to the company’s records at August 31, $42,920. Cash balance according to the bank statement at August 31, $56,300. Checks outstanding, $25,390. Deposit in transit not recorded by bank, $13,325. A check for $150 in payment of an account was erroneously recorded in the check register as $1,500. Bank debit memo for service charges, $35. Question Content Area a. Prepare a bank reconciliation, using the format shown in Exhibit 13. Creative Design Co.Bank ReconciliationAugust 31, 20Y6 Cash balance according to bank statement blank $fill in the blank 0ff66e00407e061_1 - Select - blank - Select - Adjusted balance blank $fill in the blank 0ff66e00407e061_6 Cash balance according to company's records blank $fill in the blank 0ff66e00407e061_7 blank - Select - blank - Select - Adjusted balance blank $fill in the…