The president of The Peterson Company suspects the bookkeeper is embezzling cash from the company. She asks you, confidentially, to look over the bank reconciliation that the bookkeeper has prepared to see if you discover any discrepancies between the books and the bank statement. She provides you with the Cash account from the general ledger, the bank statement, and the bank reconciliation as of December 31. You learn from the November bank reconciliation that the following checks were outstanding on November 30: No. 1560 for $187, No. 1880 for $542, No. 1882 for $119, and No. 1883 for $460. There was one deposit in transit on November 30 for $1,284. An examination of the actual deposit slips revealed no bank errors. Assume the cash deposit of $2,450 on December 24 is the correct amount. The January bank statement showed that a $610 deposit cleared the bank on January 2.

Requirement
1. Prepare a corrected bank reconciliation. Show the unexplained difference as an adjustment to the book balance. Include in your analysis the amount of the theft and how the bookkeeper attempted to conceal the theft.

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A1 B Peterson Company Bank Reconciliation December 31 Bank Books $ 4,065 Balance, 12/31 Add: 3,110 EFT receipt from customer 7,175 Interest revenue |Subtotal Less: Book error NSF check (1,196)| EFT payment of utilities $ 5,979 Adjusted book balance $ 11,755 3 Balance, 12/31 4 Add: Deposits in transit 6 Subtotal 7 Less: Outstanding checks No. 1560 53 6 11,814 $ 5,000 100 187 847 162 9. No. 1901 10 (5,835) No. 1902 735 11 12 Adjusted bank balance 13 |$ 5,979 General Ledger Cash Bal 12/1 Cash receipt 12/7 Cash receipt 12/15 Cash receipt 12/23 Cash receipt 12/30 6,266 1,500 4,195 7,450 610 No. 1884 1,287 1,323 No. 1885 No. 1886 750 2,439 1,025 No. 1887 No. 1888 No. 1889 433 No. 1901 847 No. 1902 162 Bal 12/31 11,755