The CFO of Gabe Corp. suspects that an employee has been stealing cash from the company. The employee is responsible for receiving cash from customers and posting the payments to the customer accounts, as well as preparing the bank reconciliation and managing the cash account. To check up on the employee, the CFO prepares his own bank reconciliation and comes up with the following:
Gabe | Differences | Bank | |
$3,900 | Beginning balance | $4,000 | |
(50) | Service charges | ||
Outstanding checks | (800) | ||
(100) | NSF Check from Customer | ||
Deposits in transit | 250 | ||
25 | Interest earned | --------- | |
$3,775 | Total | $3,450 |
Do you think the employee has stolen from the company? Why or why not? If the employee has stolen, how much has been stolen? How could this kind of problem be prevented in the future?
YES, the employee has stolen $100 from the company. To verify this we can prepare updated cash book from the information provided by the bank and recording those transaction which are not recorded in Cashbook.
After this we can prepare Bank Reconciliation statement to reconcile the balance between cashbook and balance as per bank statement. If there is a difference between balance as per updated cashbook and reconciled balance as per bank then that means employee has stolen from the company.
This problem can be prevented in the future by preparing Bank reconciliation statement timely and maintaining proper records of cash and bank transactions. Gabe can follow control cash receipts method and supervise the employees closely.
SCHEDULE SHOWING UPDATED CASHBOOK
Closing Balance as per Gabe = $ 3,775
(-) Outstanding cheque cleared but not updated = $ (800)
(+) Cheque Deposited but not recorded = $ 250
UPDATED CLOSING BALANCE = $ 3225
BANK RECONCILIATION STATEMENT
Closing balance as per Bank = $ 3450
(-) NSF check from customer = $ (100)
(-) Service Charges = $ (50)
(+) Interest earned = $ 25
Reconciled Balance as per Bank = $ 3325
The CFO of Gabe Corp. suspects that an employee has been stealing cash from the company....
The CFO of Gabe Corp. suspects that an employee has been stealing cash from the company. The employee is responsible for receiving cash from customers and posting the payments to the customer accounts, as well as preparing the bank reconciliation and managing the cash account. To check up on the employee, the CFO prepares his own bank reconciliation and comes up with the following: Gabe Differences Bank $3,900 Beginning balance $4,000 (50) Service charges Outstanding checks (800) (100) NSF...
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