A Company Had Poor Internal Control Over Its Cash Transactions

question 118

Essay

A company had poor internal control over its cash transactions. Facts about its cash position at June 30, 2008, were as follows:
The cash account showed a balance of $37,804, which included undeposited receipts. A credit of $200 on the bank's records did not appear on the books of the company. The balance per the bank statement was $31,102. Outstanding cheques were: No. 62 for $232, No. 183 for $300, No. 284 for $506, No. 8621 for $382, No. 8623 for $414, and No. 8632 for $290.
The cashier removed all undeposited receipts in excess of $7,588 and prepared the following reconciliation: $$\begin{array} { | l | l | l | } \hline \text { Balance, per books, June } 30,2008 & & \$ 37,804 \\\hline \text { Add: Outstanding cheques } & & \\\hline 8621 & \$ 382 & \\\hline 8623 & 414 & \\\hline 8632 & 290 & 886 \\\hline & & 38,690 \\\hline \text { Less: Undeposited receipts } & & 7,588 \\\hline \text { Balance per bank, June } 30,2001 & & 31,102 \\\hline \text { Deduct: Unrecorded credit } & & 200 \\\hline \text { True cash, June } 30,2001 & & \$ 30,902 \\\hline\end{array}$$ Prepare a supporting schedule showing how much the cashier removed. Also, explain how the cashier attempted to conceal the theft.

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