Question

Creative Idea Company had poor internal control over its cash transactions. The following are facts about its cash position on December 31, 2017:

--The general ledger account for cash showed a balance of $18,901.62, which included undeposited receipts.

--A credit of $100 on the bank statement did not appear on the general ledger of the company.

--The cash balance on December 31^st according to the bank statement was $15,550.00.

--Outstanding checks were:

                No. 40 for $116.25

                No. 199 for $150.00

                No. 363 for $253.25

                No. 4525 for $190.71

                No. 4529 for $206.80

                No. 4555 for $145.28

--The first deposit recorded by the bank on the cutoff statement was for $3,794.41 on January 10,2018.

The cashier handles all incoming cash and makes bank deposits personally. She also reconciles the monthly bank statement. Her December 31^st reconciliation shows the following:

Balance per books                           $18,901.62

Add: Outstanding checks:

   4525   $190.71

   4529   206.80

   4555       45.28                                         442.79

Total                                                      $19,344.41

Less: Undeposited cash                    3,794.41

Balance per bank                                15,550.00

Deduct: Unrecorded credit                100.00

True Cash, December 31               $15,450.00

1. You suspect that the cashier may have misappropriated some money and your specific concern is that some of the undeposited receipts may have been taken. Prepare a schedule showing your estimate of the loss.
2. If there is a theft, how did the cashier attempt to conceal it?
3. Give two internal controls over cash that are missing in this case, based on the information that you have been given.

Answer 1