You are a forensic accountant that has been hired to help investigate Trump Ltd. You first...

 

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You are a forensic accountant that has been hired to help investigate Trump Ltd. You first discover that Eric, one of the owner's relatives, performs duties combining the jobs of cashier and bookkeeper. As a result, Eric handles all cash recelpts, keeps the accounting records, and prepares the monthly bank reconciliations. The balance per the 31 May 2020 bank statement was $15,313. Outstanding checks were no. 62 for $107.74, no. 183 for $127.50, no. 284 for $215.26, no. 862 for $132.10, no. 863 for $192.78, and no. 864 for $140.49. The statement showed a direct deposit by a customer who had been invoiced earlier for a credit sale. The amount of the deposit was for $460, and this has not yet been recorded by the business. The company's ledger showed one cash account with a balance of $18,608.81. The balance included cash on hand that was awaiting deposit. Because of the lack of internal controls, Eric absconded with all of the cash in excess of $3,226.18. He then prepared the following bank reconciliation in an effort to conceal his theft. Bank Reconciliation Cash balance per GL, 31 May Add: Outstanding checks $18,608.81 No. 862 $132.10 No. 863 192.78 No. 864 140.49 390.37 18,999.18 Less: Deposits in transit 3,226.18 Unadjusted balance per bank, 31 May 15,773.00 Less: Direct deposit 460.00 Cash balance per bank statement, 31 May $15,313.00 Required: a) In order to determine the amount of the fraud, start with the given balance per the bank statement, which is correct, and prepare a bank reconciliation as discussed in lecture and tutorial. The balance per GL that you will derive will be correct and different from the fraudulent figure of $18,608.81 calculated by Eric. b) Calculate the amount of the fraud. (Hint: do not ignore the direct deposit Eric failed to record.) c) Prepare the two journal entries required by a) and b). Ignore GST. Where in the SOCI should the loss appear? (You may assume the company was uninsured and that the loss is not recoverable from Eric, who has left for Africa (permanently) to hunt endangered species. d) Discuss the three ways that Eric used to conceal the theft. The three ways should total to the amount of the theft. You are a forensic accountant that has been hired to help investigate Trump Ltd. You first discover that Eric, one of the owner's relatives, performs duties combining the jobs of cashier and bookkeeper. As a result, Eric handles all cash recelpts, keeps the accounting records, and prepares the monthly bank reconciliations. The balance per the 31 May 2020 bank statement was $15,313. Outstanding checks were no. 62 for $107.74, no. 183 for $127.50, no. 284 for $215.26, no. 862 for $132.10, no. 863 for $192.78, and no. 864 for $140.49. The statement showed a direct deposit by a customer who had been invoiced earlier for a credit sale. The amount of the deposit was for $460, and this has not yet been recorded by the business. The company's ledger showed one cash account with a balance of $18,608.81. The balance included cash on hand that was awaiting deposit. Because of the lack of internal controls, Eric absconded with all of the cash in excess of $3,226.18. He then prepared the following bank reconciliation in an effort to conceal his theft. Bank Reconciliation Cash balance per GL, 31 May Add: Outstanding checks $18,608.81 No. 862 $132.10 No. 863 192.78 No. 864 140.49 390.37 18,999.18 Less: Deposits in transit 3,226.18 Unadjusted balance per bank, 31 May 15,773.00 Less: Direct deposit 460.00 Cash balance per bank statement, 31 May $15,313.00 Required: a) In order to determine the amount of the fraud, start with the given balance per the bank statement, which is correct, and prepare a bank reconciliation as discussed in lecture and tutorial. The balance per GL that you will derive will be correct and different from the fraudulent figure of $18,608.81 calculated by Eric. b) Calculate the amount of the fraud. (Hint: do not ignore the direct deposit Eric failed to record.) c) Prepare the two journal entries required by a) and b). Ignore GST. Where in the SOCI should the loss appear? (You may assume the company was uninsured and that the loss is not recoverable from Eric, who has left for Africa (permanently) to hunt endangered species. d) Discuss the three ways that Eric used to conceal the theft. The three ways should total to the amount of the theft.

Answer rating: 100% (QA)

Answer1 Bank Reconciliation For the Month Ended May 31 Cash balance per bank statement 1531... View the full answer