ACC290 University of Phoenix Daisey Company Bank Reconciliation Paper

Purpose of Assignment

Reconciling bank accounts is a good way tohelp maintain internal controls over cash. With time lags and postingerrors it is easy for cash transactions to be omitted, recorded in adifferent accounting period, or reflect incorrect amounts. Thisassignment with give you practical experience in reconciling the cashbalance as noted on the company books to the bank’s records.

Assignment Steps

Resources: Financial Accounting: Tools for Business Decision Making

Scenario: Daisey Companyis a very profitable small business. It has not, however given muchconsideration to internal control. For example, in an attempt to keepclerical and office expenses to a minimum, the company has combined thejobs of cashier and book-keeper. As a result, Bret Turrin handles allcash receipts, keeps the accounting records, and prepares the monthlybank reconciliations.

The balance per the bank statement onOctober 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 statementwas a credit memorandum of $185 indicating the collection of a notereceivable for Daisey Company by the bank on October 25.

This memorandum has not been recorded by Daisey.

The company’s ledger showed one Cashaccount with a balance of $21,877.72. The balance included undepositiedcash on hand. Because of the lack of internal controls, Bret took forpersonal use all of the undeposited receipts in excess of $3,795.51. Hethen prepared the following bank reconciliation in an effort to concealhis theft of cash:

Prepare a 650-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?