Chapter 7 HW - Student Name: Ankita Shah Class: Financial...

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Student Name: Ankita Shah Class: Financial Accounting Problem 07-02 OSAGE FARM SUPPLY Corrected bank reconciliation for November Balance per bank statement, November 30 $20,600.00 Add: Deposit in transit 1,245.00 Subtotal $21,845.00 Less: Outstanding checks: no. 8231 $400.00 no. 8263 524.00 no. 8288 176.00 no. 8294 5,000.00 Total outstanding checks 6,100.00 Adjusted cash balance per bank statement $15,745.00 Balance per accounting records $35,400.00 Add: Note receivable collected by bank 6,255.00 Subtotal $41,655.00 Less: NSF check returned $130.00 Bank service charges 15.00 145.00 Adjusted cash balance per accounting records prior to recognition of cash shortage $41,510.00 Less: Indicated cash shortage 25,765.00 Adjusted cash balance per accounting records $15,745.00 ^ Correct! OSAGE FARM SUPPLY Intentional Errors Escola attempted to conceal the shortage by making the following intentional errors in her reconciliation: Errors leading to a $13,255 overstatement of the adjusted balance per the bank statement: Overstating deposit in transit with a transposition error $900 Improperly adding the amount of the note collected by the bank to the bank balance 6,255 Making an addition error in adding adjustments to the balance per the bank statement 1,000 Omitting check no. 8294 from the outstanding check list 5,000 Understating the sum of the outstanding checks listed 100 $13,255 Error causing a $12,510 understatement of the adjusted balance per the accounting records: Subtracting the $6,255 amount of the credit memorandum even though the caption stated that this amount should be added 12,510 Total shortage concealed in Escola's bank reconciliation $25,765
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^ Correct!
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c. Suggest some specific internal control measures that appear to be necessary for Osage Farm Supply. First and formost, if possible I would recommend terminating Escola, for stealing from
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Chapter 7 HW - Student Name: Ankita Shah Class: Financial...

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