Explain principles of internal control were violated in case

Assignment Help Accounting Basics

Reference no: EM131404504

Assignment

Purpose of Assignment

Reconciling bank accounts is a good way to help maintain internal controls over cash. With time lags and posting errors it is easy for cash transactions to be omitted, recorded in a different accounting period, or reflect incorrect amounts. This assignment with give you practical experience in reconciling the cash balance as noted on the company books to the bank's records.

Assignment Steps

Resources: Financial Accounting: Tools for Business Decision Making

Scenario: Daisey 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 book-keeper. 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, 2017, was $18,380. Outstanding checks were No. 62 for $140.75, No. 183 for $180, No. 284 for $253.25, No. 862 for $190.71, No. 863 for $226.80, and No. 864 for $165.28. Included with the statement was a credit memorandum of $185 indicating the collection of a note receivable for Daisey Company by the bank on October 25.

This memorandum has not been recorded by Daisey.

The company's ledger showed one Cash account with a balance of $21,877.72. The balance included undepositied cash on hand. Because of the lack of internal controls, Bret took for personal use all of the undeposited receipts in excess of $3,795.51. He then prepared the following bank reconciliation in an effort to conceal his theft of cash:

Cash balance per books, October 31		$21,877.72
Add: Outstanding checks
No. 862	$190.71
No. 863	226.80
No. 864	165.28	482.79
		22,360.51
Less: Undeposited receipts		3,795.51
Unadjusted balance per bank, October 31		18,565.00
Less: Bank credit memorandum		185.00
Cash balance per bank statement, October 31		$18,380.00

Prepare a 1,050-word bank reconciliation report (hint: deduct the amount of the theft from the adjusted balance per books) including the following:

• Indicate the three ways that Bret attempted to conceal the theft and the dollar amount involved in each method.

• What principles of internal control were violated in this case?

Show all work in the Excel spreadsheet and submit with the reconciliation report.

Reference no: EM131404504

Questions Cloud

Write down a firm optimization problem : The firm's problem Write down a firm's optimization problem. Be explicit about which variables the firm chooses and which variables it takes as given. Derive and interpret the first order necessary conditions of the firm

Compare the economies and monetary policies of two countries : Compare the economies and monetary policies of the two countries that you have researched. Make at least two recommendations as to primary manner in which both countries could improve their economy and / or monetary policies.

What about anisotropy in the finished product : Do you think it might be important to know whether a raw material to be used in a manufacturing process has anisotropic properties? What about anisotropy in the finished product? Explain.

How to test the hypothesis of no differences in the mean : Explain how to test the hypothesis of no differences in the mean proportions of mouth fixations for the four background noise levels.

Explain principles of internal control were violated in case : Indicate the three ways that Bret attempted to conceal the theft and the dollar amount involved in each method. What principles of internal control were violated in this case?

Locate the least squares prediction equation for y : MINITAB was used to fit the model to the data. Locate the least squares prediction equation for y on the printout shown below.

Estimate the diameter of a copper atom : The atomic weight of copper is 63.55, meaning that 6.023 × 1023 atoms weigh 63.55 g. The density of copper is 8970 kg/m3, and pure copper forms fcc crystals. Estimate the diameter of a copper atom.

Determine the size of the largest hole for the iron atoms : Show that, for the fcc unit cell, the radius r of the largest hole is given by r = 0.414R . Determine the size of the largest hole for the iron atoms in the fcc structure.

What are your actual manufacturing overhead costs : What are your actual manufacturing overhead costs, and why aren't they traced to jobs, just as direct materials and direct labor are traced to jobs?

User Account

All Pages