Question

Sur Inria les me keep on belo w the short in a year wally clear about Sio to $10 extra per day Discuss this case from the viewpoint of proper controls and professional behavior Case S-5 Bank reconciliation and internal control The records of Clairement Company indicate an August 31, 20Y1 cash balance of $6.675 which includes undeposited receipts for August 30 and 31. The cash balance on the bank statement as of August 31 .350. This balance includes note of $5.000 plus $210 inter est collected by the bank but not recorded in the sournal. Check outstanding on August 31 were as follows: No. 370, 5580, No. 379, 5615: No. 390,8900, No. 1148, $225, No. 11:49 $300, and No. 1151, 5750. On August 9, the cashier resigned, effective at the end of the month. Before leaving on August 31, the cashier prepare the following bank monciliation Cash balance per books, August 31, 2011 $6,675 Add outstanding checks No. 1148 1,175 Less undeposited receipts Cash balance per bank, August 31, 2011 Deduct recorded note with interest True cash August 31, 2011 37.850 Sco 55,350 010) $ 2.140 Caro Type our Chapter Internal Control and Cash Subsequently, the owner of Clairmont Company discovered that the cashier had stolen an unknown amount of undeposited receipts, leaving only $2.500 to be deposited on August 31. The owner, a close family friend, has asked for your help in determining the amount that the former cashier has stolen. 1. Determine the amount the cashier stole from Claremont Company Show your computa tions in good form. 2. How did the cashier attempt to conceal the there 3. Identify two major weaknesses in Internal controls that allowed the cashier to steal the

Answer 1

According to the requirement of the question, we have to determine the amount the cashier stole and cashier attempt to conceal the theft and two major weakness.

Requirement 1:- Determine the amount the cashier stole from Clairemont Company. Show your computations in good form.

Solution:- There are lot of methods to determine the ways used by cashier to steal the cash. In this problem, bank reconciliation statement is used.

Clairemont Company

Bank Reconciliation Statement

August 31

Particulars	Amounts ($)	Amounts ($)
Cash Balance as per Bank Statement		$5,350
Add: Un deposited cash receipts on hand		$2,500
Less: Outstanding Checks
No: 370	$580
No: 379	$615
No: 390	$900
No: 1148	$225
No: 1149	$300
No: 1151	$750	$(3,370)
Adjusted Cash Balance as per Bank		$4,480
Cash Balance According to Company's record		$6,675
Add: Notes and interest receivable collected by bank ($3,000 + $210)		$3210
Adjusted Balance		$9,885
Adjusted Balance according to Company's records		$9,885
Adjusted Balance according to bank statement		$4,480
Amount Stolen by Cashier		$5,405

Requirement 2:- How did the cashier attempt to conceal the theft?

Solution:- He attempted to conceal his theft by:

1. Not listing all outstanding Checks.

2. Miscalculating the outstanding checks shown on the reconciliation.

Requirement 3:- Identify two major weakness in internal controls that allowed the cashier to steal the un deposited cash receipts.

Solution:- 1. Large amount of un-deposited cash receipts were kept on hand during the month.

2. The cashier prepared the bank reconciliation. This allowed the cashier to conceal the theft temporarily.

Thank you...