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Blossom 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, Bret Turrin handles all cash receipts, keeps the accounting records, and prepares the monthly bank reconciliations. The balance per the bank statement on October 31, 2022, was $18,368.00. Outstanding checks were No. 62 for $140.00, No. 183 for $170.00, No. 284 for $253.00, No. 862 for $190.00, No. 863 for $226.00, and No. 864 for $165.00. Included with the statement was a credit memorandum of $185.00 indicating the collection of a note receivable for Blossom Company by the bank on October 25. This memorandum has not been recorded by Blossom. The companys ledger showed one Cash account with a balance of $21,867.00. The balance included undeposited cash on hand. Because of the lack of internal controls, Bret took for personal use all of the undeposited receipts in excess of $3,795.00. He then prepared the following bank reconciliation in an effort to conceal his theft of cash.

Cash balance per books, October 31				$21,867.00
Add: Outstanding checks
No. 862		$190.00
No. 863		226.00
No. 864		165.00		481.00
				22,348.00
Less: Undeposited receipts				3,795.00
Unadjusted balance per bank, October 31				18,553.00
Less: Bank credit memorandum				185.00
Cash balance per bank statement, October 31				$18,368.00

(a) Prepare a correct bank reconciliation. (Hint: Deduct the amount of the theft from the adjusted balance per books.) (List items that increase balance as per bank & books first.)

BLOSSOM COMPANY Bank Reconciliation

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