Green Construction Inc. has poor internal control. Recently, Jean Ouimet, the owner, has suspected the bookkeeper of stealing. Here are some details of the business's cash position at June 30, 2017:
a. The Cash account shows a balance of $10,402. This amount includes a June 30 deposit of $3,794 that does not appear on the June 30 bank statement.
b. The June 30 bank statement shows a balance of $8,224. The bank statement lists a $200 bank collection, an $8 service charge, and a $36 NSF cheque. The bookkeeper has not recorded any of these items.
c. At June 30, the following cheques are outstanding:
Cheque No. _____________________________________________ Amount
154 ...................................................................................... $116
256 ....................................................................................... 150
278 ....................................................................................... 853
291 ....................................................................................... 990
292 ....................................................................................... 206
293 ....................................................................................... 145
d. The bookkeeper records all incoming cash and makes bank deposits. He also reconciles the monthly bank statement. Here is his June 30 reconciliation:
Balance per books, June 30.............................................................................................. $10,402
Add: Outstanding cheques.......................................................................................... 1,460
Bank collection................................................................................................ 200
Subtotal...................................................................................................... 12,062
Less: Deposits in transit............................................................................. $3,794
Service charge.................................................................................................... 8
NSF cheque...................................................................................................... 36 ........ (3,838)
Balance per bank, June 30................................................................................................ $ 8,224
Requirement
Ouimet has requested that you determine whether the bookkeeper has stolen cash from the business and, if so, how much. He also asks you to explain how the bookkeeper has attempted to conceal the theft. To make this determination, you perform your own bank reconciliation. There are no bank or book errors. Ouimet also asks you to recommend any changes needed to prevent this from happening again?