Elite Service 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 bookkeeper. As a result, Steve Evans handles all cash receipts, keeps the accounting records, and prepares the monthly bank reconciliations. The balance per the bank statement on March 31, 2014, was $5,931.51. Outstanding checks were: No. 206 for $358.53, No. 441 for $292, No. 590 for $283.00, No. 781 for $286.00, No. 782 for $319.47, and No. 783 for $303.14. Included with the statement was a credit memorandum of $175 indicating the collection of a note receivable for Elite Service Company by the bank on March 21. This memorandum has not been recorded by Elite Service. The company's ledger showed one cash account with a balance of $6,889.53. The balance included undeposited cash on hand. Because of the lack of internal controls, Steve took for personal use all of the undeposited receipts in excess of $1,591.63. He then prepared the following bank reconciliation in an effort to conceal his theft of cash.

Elite Service 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 bookkeeper. As a result, Steve Evans handles all cash receipts, keeps the accounting records, and prepares the monthly bank reconciliations. The balance per the bank statement on March 31, 2014, was $5,931.51. Outstanding checks were: No. 206 for $358.53, No. 441 for $292, No. 590 for $283.00, No. 781 for $286.00, No. 782 for $319.47, and No. 783 for $303.14. Included with the statement was a credit memorandum of $175 indicating the collection of a note receivable for Elite Service Company by the bank on March 21. This memorandum has not been recorded by Elite Service. The company's ledger showed one cash account with a balance of $6,889.53. The balance included undeposited cash on hand. Because of the lack of internal controls, Steve took for personal use all of the undeposited receipts in excess of $1,591.63. He then prepared the following bank reconciliation in an effort to conceal his theft of cash.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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