Question

The president of The Pembrook Company has recently become concerned that the bookkeeper has embezzled cash from the company. He 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. He 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 $185, No. 1880 for $565, No. 1882 for $122, and No. 1883 for $468. There was one deposit in transit on November 30 for $1,252. An examination of the actual deposit slips revealed no bank errors. Assume the cash deposit of $2,425 on December 24 is the correct amount. The January bank statement showed that a $650 deposit cleared the bank on January 2.


Bank Statement for December 31


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 thetheft.


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  • CreatedJuly 25, 2014
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