Snake Creek Company has a trusted employee who, as the owner said, “handles all of the bookkeeping and paperwork for the company.” This employee is responsible for counting, verifying, and recording cash receipts and payments, making the weekly bank deposit, preparing cheques for major expenditures (signed by the owner), making small expenditures from the cash register for daily expenses, and collecting accounts receivable. The owner asked the local bank for a $20,000 loan. The bank asked that an audit be performed covering the year just ended. The independent auditor (a local CPA), in a private conference with the owner, presented some evidence of the following activities of the trusted employee during the past year: Cash sales sometimes were not entered in the cash register and the trusted employee pocketed approximately $50 per month. Cash taken from the cash register (and pocketed by the trusted employee) was replaced with expense memos with fictitious signatures (approximately $12 per day). $300 collected on an account receivable from a valued out-of-town customer was pocketed by the trusted employee and was covered by making a $300 entry as a debit to Inventory and a credit to Accounts Receivable. $800 collected on an account receivable from a local customer was pocketed by the trusted employee and was covered by making an $800 entry as a debit to Supplies and a credit to Accounts Receivable. Required: 1. What was the approximate amount stolen during the past year? TIP: Assume employees work 5 days a week, 52 weeks a year.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

100%

Snake Creek Company has a trusted employee who, as the owner said, “handles all of the bookkeeping and paperwork for the company.” This employee is responsible for counting, verifying, and recording cash receipts and payments, making the weekly bank deposit, preparing cheques for major expenditures (signed by the owner), making small expenditures from the cash register for daily expenses, and collecting accounts receivable. The owner asked the local bank for a $20,000 loan. The bank asked that an audit be performed covering the year just ended. The independent auditor (a local CPA), in a private conference with the owner, presented some evidence of the following activities of the trusted employee during the past year:

Cash sales sometimes were not entered in the cash register and the trusted employee pocketed approximately $50 per month.
Cash taken from the cash register (and pocketed by the trusted employee) was replaced with expense memos with fictitious signatures (approximately $12 per day).
$300 collected on an account receivable from a valued out-of-town customer was pocketed by the trusted employee and was covered by making a $300 entry as a debit to Inventory and a credit to Accounts Receivable.
$800 collected on an account receivable from a local customer was pocketed by the trusted employee and was covered by making an $800 entry as a debit to Supplies and a credit to Accounts Receivable.

Required:
1. What was the approximate amount stolen during the past year? TIP: Assume employees work 5 days a week, 52 weeks a year.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

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.

Similar questions