The owner of ABC Inc. has reason to believe that an employee has been stealing cash from the company. The employee receives cash from clients, makes the bank deposit, and also prepares the monthly bank reconciliation. To check up on the employee, the owner prepares his own bank reconciliation, as follows:
Does it appear the employee has stolen from the company? If so, how much? Explain your answer.
Which side of the bank reconciliation shows the company's true cash balance?
Definitions:
Book Value
The net value of a company's assets minus its liabilities, often used to assess its financial position.
Common Share
A type of equity ownership in a corporation, giving shareholders voting rights and a share in the company's profits through dividends.
Par Value
The nominal value of a bond or stock as declared by the issuer, not always representing its current market price.
Journal Entries
Recorded transactions in the accounting books that track all financial activities of a business.
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