Financial Accounting
14th Edition
ISBN: 9781305088436
Author: Carl Warren, Jim Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Question
Chapter 8, Problem 23E
(a)
To determine
Calculate the amount of cash receipts stolen by the sales clerk.
(b)
To determine
Identify the internal controls that are used in preventing / detecting the theft.
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Alaska Impressions Co. records all cash receipts on the basis of its cash register tapes.
Alaska Impressions Co. discovered during October that one of its salesclerks had stolen
an undetermined amount of cash receipts while taking the daily deposits to the bank.
The following data have been gathered for October:
Cash in bank according to the general ledger
Cash according to the October 31 bank statement
Outstanding checks as of October 31
Bank service charge for October
Note receivable, including interest collected by bank in October
$11,680
13,275
3,670
40
2,100
No deposits were in transit on October 31.
a. Determine the amount of cash receipts stolen by the salesclerk.
b.
-What accounting controls would have prevented or detected this theft?
Alaska Impressions Co. records all cash receipts on the basis of its cash register tapes. Alaska Impressions discovered during October 20Y3 that one of its sales clerks had stolen an undetermined amount of cash receipts by taking the daily deposits to the bank. The following data have been gathered for October:
Cash in bank according to the general ledger
$6,110
Cash according to the October 31, 20Y3, bank statement
14,115
Outstanding checks as of October 31, 20Y3
4,035
Bank service charge for October
20
Note receivable, including interest collected by bank in October
6,540
No deposits were in transit on October 31.
a. Determine the amount of cash receipts stolen by the sales clerk.
An auditor suspects that a client's cashier is misappropriating cash receipts for personal use by lapping customer checks received in the mail. In attempting to uncover this embezzlement scheme, the auditor most likely would compare the
Group of answer choices
Daily cash summaries with the sums of the cash receipts journal entries.
Individual bank deposit slips with the details of the monthly bank statements.
Dates checks are deposited per bank statements with the dates remittance credits are recorded.
Dates uncollectible accounts are authorized to be written off with the dates the write-offs are actually recorded.
Chapter 8 Solutions
Financial Accounting
Ch. 8 - Prob. 1DQCh. 8 - Why should the employee who handles cash receipts...Ch. 8 - Prob. 3DQCh. 8 - Why should the responsibility for maintaining the...Ch. 8 - Assume that Brooke Miles, accounts payable clerk...Ch. 8 - Prob. 6DQCh. 8 - Prob. 7DQCh. 8 - Prob. 8DQCh. 8 - Prob. 9DQCh. 8 - Prob. 10DQ
Ch. 8 - Prob. 1PEACh. 8 - Prob. 1PEBCh. 8 - Prob. 2PEACh. 8 - Prob. 2PEBCh. 8 - Prob. 3PEACh. 8 - Prob. 3PEBCh. 8 - Prob. 4PEACh. 8 - Prob. 4PEBCh. 8 - Financial data for Otto Company follow: a....Ch. 8 - Prob. 5PEBCh. 8 - Prob. 1ECh. 8 - Prob. 2ECh. 8 - Prob. 3ECh. 8 - Pacific Bank provides loans to businesses in the...Ch. 8 - Prob. 5ECh. 8 - An employee of JHT Holdings, Inc., a trucking...Ch. 8 - Prob. 7ECh. 8 - Prob. 8ECh. 8 - Prob. 9ECh. 8 - Prob. 10ECh. 8 - Prob. 11ECh. 8 - Prob. 12ECh. 8 - Prob. 13ECh. 8 - Abbe Co. is a small merchandising company with a...Ch. 8 - Prob. 15ECh. 8 - Prob. 16ECh. 8 - Prob. 17ECh. 8 - Prob. 18ECh. 8 - Prob. 19ECh. 8 - Prob. 20ECh. 8 - Prob. 21ECh. 8 - Prob. 22ECh. 8 - Prob. 23ECh. 8 - Prob. 24ECh. 8 - Mattel, Inc., designs, manufactures, and markets...Ch. 8 - El Dorado Inc. has monthly cash expenses of...Ch. 8 - Prob. 27ECh. 8 - Amicus Therapeutics, Inc., is a biopharmaceutical...Ch. 8 - Prob. 1PACh. 8 - Cactus Restoration Company completed the following...Ch. 8 - Prob. 3PACh. 8 - Prob. 4PACh. 8 - Prob. 5PACh. 8 - Prob. 1PBCh. 8 - Cedar Springs Company completed the following...Ch. 8 - Prob. 3PBCh. 8 - Prob. 4PBCh. 8 - Prob. 5PBCh. 8 - During the preparation of the bank reconciliation...Ch. 8 - Prob. 2CPCh. 8 - Prob. 3CPCh. 8 - Prob. 4CPCh. 8 - Prob. 5CPCh. 8 - TearLab Corp. is a health care company that...
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- Alaska Impressions Co. records all cash receipts on the basis of its cash register tapes. Alaska Impressions Co. discovered during October that one of its salesclerks had stolen an undetermined amount of cash receipts while taking the daily deposits to the bank. The following data have been gathered for October: Cash in bank according to the general ledger $6,130 Cash according to the October 31 bank statement 14,160 Outstanding checks as of October 31 4,045 Bank service charge for October 20 Note receivable, including interest collected by bank in October 6,560 No deposits were in transit on October 31. a. Determine the amount of cash receipts stolen by the sales clerk.arrow_forwardAlaska Impressions Co. records all cash receipts on the basis of its cash register tapes. Alaska Impressions discovered during October 20Y3 that one of its sales clerks had stolen an undetermined amount of cash receipts by taking the daily deposits to the bank. The following data have been gathered for October: Cash in bank according to the general ledger $12,620 Cash according to the October 31, 20Y3, bank statement 12,990 Outstanding checks as of October 31, 20Y3 3,340 Bank service charge for October 35 Note receivable, including interest collected by bank in October 2,260 No deposits were in transit on October 31. A. Determine the amount of cash receipts stolen by the sales clerk. B. What accounting controls would have prevented or detected this theft? Cash receipts stolen A. Determine the amount of cash receipts stolen by the sales clerk. Final question B. What accounting controls would have prevented or…arrow_forwardPala Co. records all cash receipts on the basis of its cash register tapes. Pala Co. discovered during April 20Y1 that one of its sales clerks had stolen an undetermined amount of cash receipts when she took the daily deposits to the bank. The following data have been gathered for April: Cash in bank according to the company records $7,535 Cash according to the April 30, 20Y1, bank statement 17,405 Outstanding checks as of April 30, 20Y1 4,975 Bank service charges for April 25 Note receivable, including interest collected by bank in April 8,060 No deposits were in transit on April 30. a. Determine the amount of cash receipts stolen by the sales clerk.$? b. Daily reconciliation of the amount of cash receipts, comparing the (cash register tapes or bank debit memos) to a receipt from the bank as to the amount deposited, like (a bank reconciliation or a duplicate deposit ticket) , would discourage theft of the cash receipts, as in the case of First Impressions Co.arrow_forward
- The following misstatements are included in the accounting records of the Dillon Manufacturing Company: Cash paid on accounts receivable was stolen by the mail clerk when the mail was opened. A sales invoice was miscalculated by $1,000 as a result of a key-entry mistake. Cash paid on accounts receivable that had been prelisted by a secretary was stolen by the bookkeeper, who records cash receipts and accounts receivable. He failed to record the transactions. A material sale was recorded on the last day of the year even though the goods were not shipped until three days later. Merchandise was shipped to a customer, but no bill of lading was prepared. Because billings are prepared from bills of lading, the customer was not billed. The controller approved a payment to a consulting firm owned by his sister. The consulting firm did not actually perform any services for the company. The shipping clerk included several additional valuable items in a shipment that were not…arrow_forwardAlaska Impressions Co. records all cash receipts on the basis of its cash register tapes. Alaska Impressions discovered during October 20Y3 that one of its sales clerks had stolen an undetermined amount of cash receipts by taking the daily deposits to the bank. The following data have been gathered for October: Cash in bank according to the general ledger $12,700 Cash according to the October 31, 20Y3, bank statement 13,530 Outstanding checks as of October 31, 20Y3 3,660 Bank service charge for October 40 Note receivable, including interest collected by bank in October 2,020 No deposits were in transit on October 31. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. Open spreadsheet a. Determine the amount of cash receipts stolen by the sales clerk, Round your answer to the nearest dollar. 4,810 b. What accounting controls would have prevented or detected this…arrow_forwardWhich of the following is not an appropriate internal control for cash receipts over the counter? A. The cash drawer opens after the store clerk enters a transaction. B. The store clerk deposits the cash in the bank. C. At the end of the day, the manager proves the cash by comparing the cash in the drawer against the machine's record of cash sales. D. A receipt is issued for each transaction to ensure that each sale is recorded.arrow_forward
- Which of the following controls would be most effective in detecting a failure torecord cash received from customers paying on their accounts?(1) A person in accounting reconciles the bank deposit to the cash receipts journal.(2) Transactions recorded in the cash receipts journal are posted on a real-timebasis to the accounts receivable master file.(3) Monthly statements are sent to customers and any discrepancies are resolved bysomeone independent of cash handling and accounting.(4) Deposits of cash received are made daily.arrow_forwardEach morning the controller gets the prior day’s list of remittances, a copy of the payment report, and a copy of the deposit slip returned from the bank. When comparing these items, the controller would be able to determine thata. No checks were returned for insufficient funds.b. The cash received and remittance advice received were maintained in a single batch.c. The accounts receivable system has controls over unauthorized access.d. The assistant controller does not also reconcile the subsidiary accounts payable.arrow_forwardYou are the auditor for Konerko’s Office Supply Store, which is opening for business next week. The store owner has established all the controls you have recommended for ensuring that sales are recorded properly and cash is accounted for. The owner has heard from other small business owners that employees often used returned goods as means of skimming money from the register. a. How might an employee use returned goods to skim money from the register? b. What controls would you recommend to prevent or detect fraudulent returns? c. What audit procedures might you perform to detect fraudulent returns?arrow_forward
- Assume that Brooke Miles, accounts payable clerk for West Coast Design Inc., stole $48,350 by paying fictitious invoices for goods that were neverreceived. The clerk set up accounts in the names of the fictitious companies and cashed the checks at a local bank. Describe a control procedure thatwould have prevented or detected the fraud.arrow_forwardAlaska Impressions Co. records all cash receipts on the basis of its cash register tapes. Alaska Impressions discovered during October 20Y3 that one of its sales clerks had stolen an undetermined amount of cash receipts by taking the daily deposits to the bank. The following data have been gathered for October: Line Item Description Amount Cash in bank according to the general ledger $11,680 Cash according to the October 31, 20Y3, bank statement 13,275 Outstanding checks as of October 31, 20Y3 3,670 Bank service charge for October 40 Note receivable, including interest collected by bank in October 2,100 No deposits were in transit on October 31. a. Determine the amount of cash receipts stolen by the sales clerk.fill in the blank 1 of 1$arrow_forwardThe internal control procedures in Philips Company make the following provisions. Identify the principles of internal control that are being followed in each case. Employees who have physical custody of assets do not have access to the accounting records. Each month the assets on hand are compared to the accounting records by an internal auditor. A prenumbered shipping document is prepared for each shipment of goods to customers. All over-the-counter receipts are registered on cash registers. All cashier are bonded. Daily cash counts are made by Cashier department supervisors. The Duties of receiving cash, recording cash, and having custody of cash are assigned to different individuals. Only Cashier may operate cash registers. Company checks are prenumbered. The bank statement is reconciled monthly by an internal auditor. Blank checks are stored in a safe in the treasurer’s office. Only the treasurer or assistant treasurer may sign checks. Checks signers are not allowed to record cash…arrow_forward
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