Question: San Diego Harbor Tours has poor internal control over cash

San Diego Harbor Tours has poor internal control over cash. Ben Johnson, the manager, suspects the cashier of stealing. Here are some details of company cash on September 30:
a. The Cash account in the ledger shows a balance of $ 6,450.
b. The September 30 bank statement shows a balance of $ 4,300. The bank statement lists a $ 200 bank collection, a $ 10 service charge, and a $ 40 NSF check.
c. On September 30, the following checks are outstanding:
$ 100
d. There is a $ 3,000 deposit in transit on September 30.
e. The cashier handles all incoming cash and makes bank deposits. He also writes checks and reconciles the monthly bank statement.

1. Perform your own bank reconciliation using the format illustrated in the chapter. There are no bank or book errors.
2. Assume that the adjusted bank balance is the correct cash amount and that all timing differences have been accounted for. How much has the cashier stolen? How can you tell?
3. Explain how Johnson can improve his internal controls.

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  • CreatedJanuary 16, 2015
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