Green Construction Inc has poor internal control Recently

Jean Ouimet #6619

Green Construction Inc has poor internal control Recently Jean Ouimet

Green Construction Inc. has poor internal control. Recently, Jean Ouimet, the owner, has
suspected the bookkeeper of stealing. Here are some details of the business's cash position at
June 30, 2017:

a. The Cash account shows a balance of $10,402. This amount includes a June 30 deposit of
$3,794 that does not appear on the June 30 bank statement.

b. The June 30 bank statement shows a balance of $8,224. The bank statement lists a $200
bank collection, an $8 service charge, and a $36 NSF cheque. The bookkeeper has not
recorded any of these items.

c. At June 30, the following cheques are outstanding:

Cheque No. _____________________________________________ Amount

154 ...................................................................................... $116

256 ....................................................................................... 150

278 ....................................................................................... 853

291 ....................................................................................... 990

292 ....................................................................................... 206

293 ....................................................................................... 145

d. The bookkeeper records all incoming cash and makes bank deposits. He also reconciles the
monthly bank statement. Here is his June 30 reconciliation:

Balance per books, June 30.............................................................................................. $10,402

Add: Outstanding cheques.......................................................................................... 1,460

Bank collection................................................................................................ 200

Subtotal...................................................................................................... 12,062

Less: Deposits in transit............................................................................. $3,794

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 Service charge.................................................................................................... 8

NSF cheque...................................................................................................... 36 ........ (3,838)

Balance per bank, June 30................................................................................................ $ 8,224

Requirement

Ouimet has requested that you determine whether the bookkeeper has stolen cash from the
business and, if so, how much. He also asks you to explain how the bookkeeper has attempted
to conceal the theft. To make this determination, you perform your own bank reconciliation.
There are no bank or book errors. Ouimet also asks you to recommend any changes needed to
prevent this from happening again?

Green Construction Inc has poor internal control Recently Jean Ouimet

ANSWER
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