Osage Farm Supply had poor internal control over its cash transactions. Facts about the companys cash position

Question:

Osage Farm Supply had poor internal control over its cash transactions. Facts about the company€™s cash position at November 30 are described below.
The accounting records showed a cash balance of $35,400, which included a deposit in transit of $1,245. The balance indicated in the bank statement was $20,600. Included in the bank statement were the following debit and credit memoranda:

Outstanding checks were as follows:
Check No. ......... Amount
8231 ............ $ 400
8263 ............ 524
8288 ............ 176
8294 ............ 5,000
Bev Escola, the company€™s cashier, has been taking portions of the company€™s cash receipts for several months. Each month, Escola prepares the company€™s bank reconciliation in a manner that conceals her thefts. Her bank reconciliation for November was as follows:

Instructions
a. Determine the amount of the cash shortage that has been concealed by Escola in her bank reconciliation. (As a format, we suggest that you prepare the bank reconciliation correctly. The amount of the shortage then will be the difference between the adjusted balances per the bank statement and per the accounting records. You can then list this unrecorded cash shortage as the final adjustment necessary to complete your reconciliation.)
b. Carefully review Escola€™s bank reconciliation and explain in detail how she concealed the amount of the shortage. Include a listing of the dollar amounts that were concealed in various ways. This listing should total the amount of the shortage determined in part a.
c. Suggest some specific internal control measures that appear to be necessary for Osage FarmSupply.