HY SERIAL PROBLEM: KATE'S CARDS d. D. ate the cash han ds. "I have to amount EYK7-2. Com The 1 Und Kate's who wo Cards Req ciliation doesn't (Note. This is a continuation of the Serial Problem. A SP7. On February 15, 2019, Kate Collins, owner of Kate's Cards, asks you to investigate the cas dling activities in her business. She believes that a new employee might be stealing funds, "The proof, she says, "but I'm fairly certain that the January 31, 2019. undeposited receipts amoun more than $12,000, although the January 31 bank reconciliation prepared by the cashier (who w the treasurer's department) shows only $7,238.40. Also, the January bank reconciliation de show several checks that have been outstanding for a long time. The cashier told me that these ch needn't appear on the reconciliation because he had notified the bank to stop payment on them ar nad made the necessary adjustment on the books. Does that sound reasonable to you? Ar your request, Kate shows you the following (unaudited) January 31, 2019, bank reconciliati prepared by the cashier: me that these checks Use EYK7-3. F $10.893.89 Ending balance from bank statement. Add: Deposits in transit....... KATE'S CARDS Bank Reconciliation January 31, 2019 $ 4,843.69 Balance from general ledger ... 7,238.40 $12,082.09 Less: Bank service charge.......... $ 60.00 Unrecorded credit.......... 1.200.00 (1.260.00 Less: Outstanding checks: No. 2351 ..... . .... . . .. No. 2353 ................ .. No. 2354 Reconciled cash balance ... ... $1,100.20 578.32 969.68 (2,448.20) $ 9,633.89 Reconciled cash balance... $ 9.633.89 Business Publishers Chapter 7 Internal Control and Cash 367 You discover that the $1.200 unrecorded bank credit represents a note collected by the bank on Kate's behalt: it appears in the deposits column of the January bank statement. Your investigation also reveals that the December 31, 2018, bank reconciliation showed three checks that had been outstanding imge than 10 months: No. 1432 for $600, No. 1458 for $466.90, and No. 1512 for $253.10. You also discover that these items were never added back into the Cash account in Kate's books. In confirming that the checks shown on the cashier's January 31 bank reconciliation were outstanding on that date. you discover that check No. 2353 was actually a payment of $1.658.32 and had been recorded on the banks for that amount. To confirm the amount of undeposited receipts at January 31, you request a bank statement for February 1-12 (called a cutoff bank statement). This indeed shows a January 1 deposit of $7.238.40. Required w Calculate the amount of funds stolen by the employee. Describe how the employee concealed the theft. What suggestions would you make to Kate about cash control procedures? EXTENDING YOUR KNOWLEDGE REPORTING AND ANALYSIS aume Sportswear Company The financial statements for HY SERIAL PROBLEM: KATE'S CARDS d. D. ate the cash han ds. "I have to amount EYK7-2. Com The 1 Und Kate's who wo Cards Req ciliation doesn't (Note. This is a continuation of the Serial Problem. A SP7. On February 15, 2019, Kate Collins, owner of Kate's Cards, asks you to investigate the cas dling activities in her business. She believes that a new employee might be stealing funds, "The proof, she says, "but I'm fairly certain that the January 31, 2019. undeposited receipts amoun more than $12,000, although the January 31 bank reconciliation prepared by the cashier (who w the treasurer's department) shows only $7,238.40. Also, the January bank reconciliation de show several checks that have been outstanding for a long time. The cashier told me that these ch needn't appear on the reconciliation because he had notified the bank to stop payment on them ar nad made the necessary adjustment on the books. Does that sound reasonable to you? Ar your request, Kate shows you the following (unaudited) January 31, 2019, bank reconciliati prepared by the cashier: me that these checks Use EYK7-3. F $10.893.89 Ending balance from bank statement. Add: Deposits in transit....... KATE'S CARDS Bank Reconciliation January 31, 2019 $ 4,843.69 Balance from general ledger ... 7,238.40 $12,082.09 Less: Bank service charge.......... $ 60.00 Unrecorded credit.......... 1.200.00 (1.260.00 Less: Outstanding checks: No. 2351 ..... . .... . . .. No. 2353 ................ .. No. 2354 Reconciled cash balance ... ... $1,100.20 578.32 969.68 (2,448.20) $ 9,633.89 Reconciled cash balance... $ 9.633.89 Business Publishers Chapter 7 Internal Control and Cash 367 You discover that the $1.200 unrecorded bank credit represents a note collected by the bank on Kate's behalt: it appears in the deposits column of the January bank statement. Your investigation also reveals that the December 31, 2018, bank reconciliation showed three checks that had been outstanding imge than 10 months: No. 1432 for $600, No. 1458 for $466.90, and No. 1512 for $253.10. You also discover that these items were never added back into the Cash account in Kate's books. In confirming that the checks shown on the cashier's January 31 bank reconciliation were outstanding on that date. you discover that check No. 2353 was actually a payment of $1.658.32 and had been recorded on the banks for that amount. To confirm the amount of undeposited receipts at January 31, you request a bank statement for February 1-12 (called a cutoff bank statement). This indeed shows a January 1 deposit of $7.238.40. Required w Calculate the amount of funds stolen by the employee. Describe how the employee concealed the theft. What suggestions would you make to Kate about cash control procedures? EXTENDING YOUR KNOWLEDGE REPORTING AND ANALYSIS aume Sportswear Company The financial statements for