Question

Gray Construction Inc. has poor internal control. Recently, Frank Root, the owner, has suspected the bookkeeper of stealing. Here are some details of the business's cash position at December 31, 2017: (Click on the icon to view additional information.) Requirement Begin by preparing the bank section of the bank reconciliation. Then, continue with the book section of the bank reconciliation. (Leave unused cells blank.) Gray Construction Inc. Bank Reconciliation December 31, 2017 BANK: Add: Requirement Less: BOOKS Root has requested that you determine whether the bookkeeper has stolen cash from the business and, if so, how much. He also asks you to explain how the bookkeeper has attempted to conceal the theft. To make this determination, you perform your own bank reconciliation. There are no bank or book errors. Root also asks you to recommend any changes needed to prevent this from happening again. Add: Print Done Less: Based on the above reconciliation, it appears the bookkeeper has stolen $ V. The bookkeeper the total of outstanding cheques by $ to cover the theft. The owner should Choose from any list or enter any number in the input fields and then continue to the next question.

Answer 1

Gray Construction, Inc. Bank Reconciliation December 31, 2017
BANK:
Balance, February 28		8727
Add: Deposit in transit		3828
		$12555
Less: Outstanding checks (118+148+820+994+201+141)		(2422)
Adjusted bank balance, February 28		$10133
BOOKS:
Balance, February 28		10430
Add: Bank collection		270
		10700
Less: Service charge	15
NSF check	52	(67)
Adjusted bank balance, February 28		$10633

Based on the above reconciliation, it appears the bookkeeper has stolen $500, the difference between the adjusted bank and book amounts. The bookkeeper understated the total of outstanding checks by $500 to cover his theft. The owner should assign the bank reconciliation to another employee or do it himself.

(10133-10633 = 500)