Solved: Gazarra Company is a very profitable small

business It has
Gazarra Company is a very profitable small business It has

Gazarra 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,
Johnny Stacatto handles all cash receipts, keeps the accounting records, and prepares the
monthly bank reconciliations. The balance per the bank statement on October 31, 2010, was
$15,453. Outstanding checks were: no. 62 for $107.74, no. 183 for $127.50, no. 284 for
$215.26, no. 862 for $162.10, no. 863 for $192.78, and no. 864 for $140.49. Included with the
statement was a credit memorandum of $340 indicating the collection of a note receivable for
Gazarra Company by the bank on October 25. This memorandum has not been recorded by
Gazarra Company. The company’s ledger showed one cash account with a balance of
$18,608.81. The balance included undeposited cash on hand. Because of the lack of internal
controls, Stacatto took for personal use all of the undeposited receipts in excess of $3,226.18.
He then prepared the following bank reconciliation in an effort to conceal his theft of cash.

Instructions
(a) Prepare a correct bank reconciliation.
(b) Indicate the three ways that Stacatto attempted to conceal the theft and the dollar amount
pertaining to each method.
(c) What principles of internal control were violated in thiscase?

Gazarra Company is a very profitable small business It has

ANSWER
https://solvedquest.com/gazarra-company-is-a-very-profitable-small-business-it-has/

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