Elite Service 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 bookkeeper. As a result, Steve Evans handles all cash receipts, keeps the accounting records, and prepares the monthly bank reconciliations. The balance per the bank statement on March 31, 2014, was $5,931.51. Outstanding checks were: No. 206 for $358.53, No. 441 for $292, No. 590 for $283.00, No. 781 for $286.00, No. 782 for $319.47, and No. 783 for $303.14. Included with the statement was a credit memorandum of $175 indicating the collection of a note receivable for Elite Service Company by the bank on March 21. This memorandum has not been recorded by Elite Service. The company's ledger showed one cash account with a balance of $6,889.53. The balance included undeposited cash on hand. Because of the lack of internal controls, Steve took for personal use all of the undeposited receipts in excess of $1,591.63. He then prepared the following bank reconciliation in an effort to conceal his theft of cash.
Elite Service 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 bookkeeper. As a result, Steve Evans handles all cash receipts, keeps the accounting records, and prepares the monthly bank reconciliations. The balance per the bank statement on March 31, 2014, was $5,931.51. Outstanding checks were: No. 206 for $358.53, No. 441 for $292, No. 590 for $283.00, No. 781 for $286.00, No. 782 for $319.47, and No. 783 for $303.14. Included with the statement was a credit memorandum of $175 indicating the collection of a note receivable for Elite Service Company by the bank on March 21. This memorandum has not been recorded by Elite Service. The company's ledger showed one cash account with a balance of $6,889.53. The balance included undeposited cash on hand. Because of the lack of internal controls, Steve took for personal use all of the undeposited receipts in excess of $1,591.63. He then prepared the following bank reconciliation in an effort to conceal his theft of cash.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Hello, Please if you can solve this problem. Thank you.
Transcribed Image Text:Elite Service 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 bookkeeper. As a
result, Steve Evans handles all cash receipts, keeps the accounting records, and prepares the
monthly bank reconciliations.
The balance per the bank statement on March 31, 2014, was $5,931.51. Outstanding checks
were: No. 206 for $358.53, No. 441 for $292, No. 590 for $283.00, No. 781 for $286.00, No.
782 for $319.47, and No. 783 for $303.14. Included with the statement was a credit
memorandum of $175 indicating the collection of a note receivable for Elite Service Company
by the bank on March 21. This memorandum has not been recorded by Elite Service.
The company's ledger showed one cash account with a balance of $6,889.53. The balance
included undeposited cash on hand. Because of the lack of internal controls, Steve took for
personal use all of the undeposited receipts in excess of $1,591.63. He then prepared the
following bank reconciliation in an effort to conceal his theft of cash.
Cash balance per books, March 31
Add: Outstanding checks
No. 781
$6,889.53
$286.00
No. 782
319.47
No. 783
303.14
808.61
7,698.14
1,591.63
Less: Undeposited receipts
Unadjusted balance per bank, March 31
Less: Bank credit memorandum
6,106.51
175.00
Cash balance per bank statement, March 31
$5,931.51
Instructions
Prepare a correct bank reconciliation. (Hint: Deduct the amount of the theft from the
adjusted balance per books.)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education