An examination of the cash activities during the year shows the following.

Suzie has not reconciled the company?s cash balance with that of the bank since the company was started. She asks Summit Bank to provide her with a six-month bank statement.To save time, Suzie makes deposits at the bank only on the first day of each month.After comparing the two balances, Suzie has some concern because the bank?s balance of $50,500 is substantially less than the company?s balance of $64,200.

Required:1. Discuss any problems you see with Great Adventures? internal control procedures related to cash.2. Prepare Great Adventures? bank reconciliation for the six-month period ended December 31, 2021, and any necessary entries to adjust cash.3. How did failure to reconcile the bank statement affect the reported amounts for assets, liabilities, stockholders? equity, revenues, and expenses?

Transcribed Image Text:

GREAT ADVENTURES Cash Account Records July 1, 2021, to December 31, 2021 Cash Receipts Cash Disbursements Date Desc. Amount Date Check# Desc. Amount $ 20,000 $ 4,800 7/1 Stock sale 7/1 101 Insurance Legal fees Advertising 7/15 Clinic receipts Clinic receipts Clinic receipts 7/2 2,000 102 1,500 300 7/22 2,300 7/7 DC 4,000 7/30 7/8 103 Bikes 12,000 Advertising Borrowing Clinic receipts Clinic receipts Clinic receipts 8/1 30,000 3,000 7/24 DC 700 28,000 8/10 8/4 104 Kayaks Office supplies 8/17 10,500 8/24 DC 1,800 13,200 9/21 9/1 105 Rent 2,400 Race permit Salary Dividend Dividend 10/17 Clinic receipts Race receipts 17,900 12/8 106 1,200 2,000 107 12/15 20,000 12/16 12/31 108 2,000 12/31 109 2,000 $122,900 $58,700 SUMMARY OF TRANSACTIONS Beginning Cash Balance Ending Cash Balance Cash Cash July 1, 2021 Receipts Disbursements December 31, 2021 $122,900 $58,700 $64,200 $0 Summit Bank Member FDIC Leading You to the Top Account Holder: Great Adventures, Inc. Account Number: 1124537774 Statement Date: Dec. 31, 2021 Account Summary Beginning Balance Deposits and Credits Withdrawals and Debits Ending Balance July 1, 2021 No. Total No. Total December 31, 2021 $0 $103,400 11 $52,900 $50,500 Account Details Deposits and Credits Withdrawals and Debits Daily Balance Date Amount Desc. Date No. Amount Desc. Date Amount 7/1 $ 20,000 DEP 7/1 101 $ 4,800 CHK 7/1 $15,200 8/1 7/7 102 CHK 7/7 8,300 DEP 30,000 DEP 13,500 DEP 1,500 300 13,400 1,400 8/1 7/7 DC 7/14 9/1 7/14 103 7/24 12,000 700 CHK 700 9/30 200 INT 7/24 DC 8/1 39,000 10/1 8/9 13,200 DEP 17,900 DEP 300 INT 8/9 104 28,000 CHK 11,000 9,200 11/1 8/24 1,800 2,400 CHK DC 8/24 12/31 9/2 105 9/1 22,700 9/30 100 SF 9/2 20,300 12/10 106 1,200 CHK 9/30 20,400 12/31 100 SF 10/1 33,600 11/1 51,500 12/10 50,300 $103,400 $52,900 12/31 $50,500 DEP Customer deposit CHK Customer check Desc. INT Interest earned SF Service fees DC Debit card