Problem on Stolen Cash

SOLUTION:

1. What is the correct amount of cash that should be on hand for deposit on
November 30,2020?

Cash balance per book, Nov.30 P94,508

Bank Credit 500
Adjusted Cash Balance 95,008
Adjusted Bank Balance:
Bank Balance, Nov.30 P77,750
Outstanding Checks:
No. 8420 P581
8422 750
8430 1,266
8621 954
8623 1,034
8632 726 (5,311) (72,439)
Cash that should be on hand
for deposit P22,569

2. How much was stolen by the cashier?

Correct cash that should be on hand for deposit P22,569

Cash Reported (18,972)
Stolen by the cashier P3,597

3. How did the cashier attempted to conceal his theft? Explain.

The cashier attempted to conceal his theft by not listing all outstanding checks.
4. What is wrong with the prepared bank reconciliation?

The prepared bank reconciliation is not faithfully represented especially the total
amount of cash because the outstanding checks is not all listed.

5. Taking only the information given, what internal control deficiencies allowed the
cashier to steal cash and conceal his theft?

The internal control deficiencies that allowed the cashier to steal cash and
conceal his theft is the lack of segregation of duties. As we can see in the problem,
no other than the cashier is responsible for the cash receipts to be the deposited in
the bank. Where in fact, the cashier also handles the preparation of the cash
reconciliation.

6. What is the adjusted cash balance as of November 30, 2020?

BANK BOOK
Unadjusted balance P77,750 P94,508
Unrecorded credit 500
Outstanding Checks (5,311)
Undeposited Receipts 18,972
Corrected Balances 91,411 95,008
Cash Shortage (3,597)
Adjusted Cash Balances P91,411 P91,411