Crane Company is a very profitable small business. It has not, however, given much consideration to internal control. For example, in an attempt to keep clerical and office expenses to a minimum, the company has combined the jobs of cashier and bookkeeper. As a result, Bret Turrin handles all cash receipts, keeps the accounting records, and prepares the monthly bank reconciliations.

The balance per the bank statement on October 31, 2022, was $19,643.00. Outstanding checks were No. 62 for $143.00, No. 183 for $172.00, No. 284 for $255.00, No. 862 for $199.00, No. 863 for $227.00, and No. 864 for $211.00. Included with the statement was a credit memorandum of $250.00 indicating the collection of a note receivable for Crane Company by the bank on October 25. This memorandum has not been recorded by Crane.

The companys ledger showed one Cash account with a balance of $23,245.00. The balance included undeposited cash on hand. Because of the lack of internal controls, Bret took for personal use all of the undeposited receipts in excess of $3,859.00. He then prepared the following bank reconciliation in an effort to conceal his theft of cash.

Cash balance per books, October 31 $23,245.00

Add: Outstanding checks

No. 862 $199.00

No. 863 227.00

No. 864 211.00 507.00

23,752.00

Less: Undeposited receipts 3,859.00

Unadjusted balance per bank, October 31 19,893.00

Less: Bank credit memorandum 250.00

Cash balance per bank statement, October 31 $19,643.00

(a) Prepare a correct bank reconciliation. (Hint: Deduct the amount of the theft from the adjusted balance per books.) (List items that increase balance as per bank & books first.)