Vaughn Company is a very profitable small business. It has not, however, given much consideration to internal control. For example, i an attempt to keep clerical and office expenses to a minimum, the company has combined the jobs of cashier and bookkeeper. 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, 2022, was $18,040. Outstanding checks were No. 62 for $160.20, No. 183 for $192.00, No. 284 for $275.25, No. 862 for $211.40, No. 863 for $250.00, and No. 864 for $178.20. Included with the statement was credit memorandum of $219.60 indicating the collection of a note receivable for Vaughn Company by the bank on October 25. This memorandum has not been recorded by Vaughn. The company's ledger showed one Cash account with a balance of $21,960.00. The balance included undeposited cash on hand. Because of the lack of internal controls, Bret took for personal use all of the undeposited receipts in excess of $4,340.00. He then prepared the following bank reconciliation in an effort to conceal his theft of cash. Cash balance per books, October 31 Add: Outstanding checks No. 862 No. 863 No. 864 Less: Undeposited receipts Unadjusted balance per bank, October 31 Less: Bank credit memorandum Cash balance per bank statement, October 31 (a) $211.40 250.00 178.20 $21,960.00 639.60 22,599.60 4,340.00 18,259.60 219.60 $18,040.00
Vaughn Company is a very profitable small business. It has not, however, given much consideration to internal control. For example, i an attempt to keep clerical and office expenses to a minimum, the company has combined the jobs of cashier and bookkeeper. 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, 2022, was $18,040. Outstanding checks were No. 62 for $160.20, No. 183 for $192.00, No. 284 for $275.25, No. 862 for $211.40, No. 863 for $250.00, and No. 864 for $178.20. Included with the statement was credit memorandum of $219.60 indicating the collection of a note receivable for Vaughn Company by the bank on October 25. This memorandum has not been recorded by Vaughn. The company's ledger showed one Cash account with a balance of $21,960.00. The balance included undeposited cash on hand. Because of the lack of internal controls, Bret took for personal use all of the undeposited receipts in excess of $4,340.00. He then prepared the following bank reconciliation in an effort to conceal his theft of cash. Cash balance per books, October 31 Add: Outstanding checks No. 862 No. 863 No. 864 Less: Undeposited receipts Unadjusted balance per bank, October 31 Less: Bank credit memorandum Cash balance per bank statement, October 31 (a) $211.40 250.00 178.20 $21,960.00 639.60 22,599.60 4,340.00 18,259.60 219.60 $18,040.00
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Vaughn 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, 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, 2022, was $18,040. Outstanding checks were No. 62 for $160.20, No. 183 for
$192.00, No. 284 for $275.25, No. 862 for $211.40, No. 863 for $250.00, and No. 864 for $178.20. Included with the statement was a
credit memorandum of $219.60 indicating the collection of a note receivable for Vaughn Company by the bank on October 25. This
memorandum has not been recorded by Vaughn.
The company's ledger showed one Cash account with a balance of $21,960.00. The balance included undeposited cash on hand.
Because of the lack of internal controls, Bret took for personal use all of the undeposited receipts in excess of $4,340.00. He then
prepared the following bank reconciliation in an effort to conceal his theft of cash.
Cash balance per books, October 31
Add:
Outstanding checks
No. 862
No. 863
No. 864
Less: Undeposited receipts
Unadjusted balance per bank, October 31
Less: Bank credit memorandum
Cash balance per bank statement, October 31
(a)
$211.40
250.00
178.20
$21,960.00
639.60
22,599.60
4,340.00
18,259.60
219.60
$18,040.00
Transcribed Image Text:VAUGHN COMPANY
Bank Reconciliation
$
$
$
$
$
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