The records of Parker Company indicate a July 31 cash balance of $10,400, which includes undeposited receipts for July 30 and 31. The cash balance on the bank statement as of July 31 is $10,575. This balance includes a note of $2,250 plus $150 interest collected by the bank but not recorded in the journal. Checks outstanding on July 31 were as follows:No. 2670, $1,050; No. 3679, $675; No. 3690, $1,650; No. 5148, $225; No. 5149, $750; and No. 5151, $800. On July 25, the cashier resigned, effective at the end of the month. Before leaving onJuly 31, the cashier prepared the following bank reconciliation:Cash balance per books, July 31Add outstanding checks:$10,400$225No. 5148 .....514975051518001,675$12,075Less undeposited receiptsCash balance per bank, July 311,500$10,575Deduct unrecorded note with interest2,400$ 8,175True cash, July 31.....Calculator Tape of Outstanding Checks:0*225+750+800+1,675*Subsequently, the owner of Parker Company discovered that the cashier had stolen anunknown amount of undeposited receipts, leaving only $1,500 to be deposited on July 31.The owner, a close family friend, has asked for your help in determining the amount thatthe former cashier stole.1. Determine the amount the cashier stole from Parker Company. Show your computa-tions in good form.2. How did the cashier attempt to conceal the theft?3. a. Identify two major weaknesses in internal controls that allowed the cashier to stealthe undeposited cash receipts.b.- Recommend improvements in internal controls so that similar types ofthefts of undeposited cash receipts can be prevented.

Bank reconciliation: Bank statement is prepared by bank. The company maintains its own records from…

Answered: On July 25, the cashier resigned,…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The records of Parker Company indicate a July 31 cash balance of $10,400, which includes undeposited receipts for July 30 and 31. The cash balance on the bank statement as of July 31 is $10,575. This balance includes a note of $2,250 plus $150 interest collected by the bank but not recorded in the journal. Checks outstanding on July 31 were as follows:
No. 2670, $1,050; No. 3679, $675; No. 3690, $1,650; No. 5148, $225; No. 5149, $750; and No. 5151, $800.

On July 25, the cashier resigned, effective at the end of the month. Before leaving on
July 31, the cashier prepared the following bank reconciliation:
Cash balance per books, July 31
Add outstanding checks:
$10,400
$225
No. 5148 .....
5149
750
5151
800
1,675
$12,075
Less undeposited receipts
Cash balance per bank, July 31
1,500
$10,575
Deduct unrecorded note with interest
2,400
$ 8,175
True cash, July 31.....
Calculator Tape of Outstanding Checks:
0*
225+
750+
800+
1,675*
Subsequently, the owner of Parker Company discovered that the cashier had stolen an
unknown amount of undeposited receipts, leaving only $1,500 to be deposited on July 31.
The owner, a close family friend, has asked for your help in determining the amount that
the former cashier stole.
1. Determine the amount the cashier stole from Parker Company. Show your computa-
tions in good form.
2. How did the cashier attempt to conceal the theft?
3. a. Identify two major weaknesses in internal controls that allowed the cashier to steal
the undeposited cash receipts.
b.
- Recommend improvements in internal controls so that similar types of
thefts of undeposited cash receipts can be prevented.

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