The president of The Pembrook Company has recently become concerned that the bookkeeper has embezzled cash from the company. He asks you, confidentially, to look over the bank reconciliation that the bookkeeper has prepared to see if you discover any discrepancies between the books and the bank statement. He provides you with the Cash account from the general ledger, the bank statement, and the bank reconciliation as of December 31. You learn from the November bank reconciliation that the following checks were outstanding on November 30: No 1560 for $185, No. 1880 for $565, No. 1882 for $122, and No. 1883 for $468. There was one deposit in transit on November 30 for $1,252. An examination of the actual deposit slips revealed no bank errors.

Requirement

1. Prepare a corrected bank reconciliation. Show the unexplained difference as an adjustment to the book balance. Include in your analysis the amount of the theft and how the bookkeeper attempted to conceal the theft.

Transcribed Image Text:

Pembrook Company Bank Reconciliation December 31 Books Balance, 12/31 3,668 Balance, 12/31 $ 9,455 Add 3,150 6,818 Deposits in transit EFT receipt from customer 52 Interest revenue 9,513 Outstanding checks No. 1560 S185 842 168 Book error NSF check EFT payment of utilities 53,000 135 755 (3,890) S 5,623 No. 1902 Adjusted bank balance 5,623Adjusted book balance General Ledger Cash Bal 12/1 Cash receipt 12/7 1,300 No. 188o 4,193 No. 1882 5,425 No. 1883 650 No. 1884 No. 1885 No. 1886 No. 1887 No. 1888 No. 1889 No. 1901 No. 1901 ash receipt 12/15 Cash receipt 12/23 Cash receipt 12/30 565 122 468 1,284 1,388 2,478 1,030 422 842 168 Bal 12/31 9,455 Bank Statement for December 31 Bal 12/1 Deposits Dec 1 S 3,787 16 24 31 31 S 1,252 1,300 4,193 2,425 6 52 Total deposits Checks and other debits: 9,228 No. 1880 No. 1882 No. 1883 No. 1884 No. 1885 No. 1886 No. 1887 No. 1888 No. 1889 NSF EFT 565 122 468 1,284 1,388 700 2,478 1,030 422 135 755 Total checks and other debits Bal 12/31 (9,347) $ 3.668