Question

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 company’s 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.)

CRANE COMPANY Bank Reconciliation choose the accounting period                                                          October 31, 2022 For the Month Ended October 31, 2022For the Year Ended October 31, 2022
select an opening name for section one                                                          Balance per bank statement Adjusted balance per bank Undeposited receipts Outstanding checks Bank credit (collection of note receivable)Theft					enter a dollar amount
select between addition and deduction                                                          AddLess:	select a reconciling item                                                          Balance per bank statement Adjusted balance per bank Undeposited receipts Outstanding checks Bank credit (collection of note receivable)Theft				enter a dollar amount
					enter a subtotal of the two previous amounts
select between addition and deduction                                                          AddLess:	select a reconciling item                                                          Balance per bank statement Adjusted balance per bank Undeposited receipts Outstanding checks Bank credit (collection of note receivable)Theft
	select a Check Number                                                          No. 62No. 63No. 183No. 184No. 284No. 285 No. 862 No. 863No. 864		enter a dollar amount
	select a Check Number                                                          No. 62No. 63No. 183No. 184No. 284No. 285 No. 862 No. 863No. 864		enter a dollar amount
	select a Check Number                                                          No. 62No. 63No. 183No. 184No. 284No. 285 No. 862 No. 863No. 864		enter a dollar amount
	select a Check Number                                                          No. 62No. 63No. 183No. 184No. 284No. 285 No. 862 No. 863No. 864		enter a dollar amount
	select a Check Number                                                          No. 62 No. 63 No. 183 No. 184 No. 284 No. 285 No. 862 No. 863No. 864		enter a dollar amount
	select a Check Number                                                          No. 62 No. 63 No. 183 No. 184 No. 284 No. 285 No. 862 No. 863No. 864		enter a dollar amount
					enter a total amount for this reconciling item
select a closing name for section one                                                          Balance per bank statement Adjusted balance per bank Undeposited receipts Outstanding checks Bank credit (collection of note receivable)Theft					$enter a total amount for the first section
select an opening name for section two                                                          Cash balance per books Adjusted balance per books (before theft)Adjusted balance per books Undeposited receipts Outstanding checks Bank credit (collection of note receivable)Theft					enter a dollar amount
select between addition and deduction                                                          AddLess:	select a reconciling item                                                          Cash balance per books Adjusted balance per books (before theft)Adjusted balance per books Undeposited receipts Outstanding checks Bank credit (collection of note receivable)Theft				enter a dollar amount
select a reconciling item                                                          Cash balance per books Adjusted balance per books (before theft)Adjusted balance per books Undeposited receipts Outstanding checks Bank credit (collection of note receivable)Theft					enter a subtotal of the two previous amounts
select between addition and deduction                                                          AddLess:	select a reconciling item                                                          Cash balance per books Adjusted balance per books (before theft)Adjusted balance per books Undeposited receipts Outstanding checks Bank credit (collection of note receivable)Theft				enter a dollar amount
select a closing name for section two                                                          Cash balance per books Adjusted balance per books (before theft) Adjusted balance per books Undeposited receipts Outstanding checks Bank credit (collection of note receivable)Theft					enter a total amount for the second section

Answer 1

Bank Reconciliation
		Amount		Amount	Amount
Bank Statement Balance		$19,643.00	Book Balance		$23,245.00
Add:			Add:
Deposit in Transit, not recorded by Bank		$3,859.00
Deduct			Deduct
Outstanding Check			Amount Stolen
Check No: 62	143		Omitted Unpresented Check	$570.00
Check No:183	172		Check No: 62:$143
Check No:284	255		Check No: 183 :172
Check No:862	199		Check No: 284:255
Check No:863	227		Totaling difference of Check No862, 863, 864 (637-507)	$130.00
Check No:864	211	$1,207.00	Note Received Collected	$250.00	$950.00
Adjusted Balance		$22,295.00	Adjusted Balance		$22,295.00