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Problem 7-6A

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, 2017, was $20,171.00. Outstanding checks were No. 62 for $153.00, No. 183 for $179.00, No. 284 for $259.00, No. 862 for $226.00, No. 863 for $265.00, and No. 864 for $211.00. Included with the statement was a credit memorandum of $218.00 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 $23,732.00. 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 $3,905.00. He then prepared the following bank reconciliation in an effort to conceal his theft of cash.

Cash balance per books, October 31				$23,732.00
Add: Outstanding checks
No. 862		$226.00
No. 863		265.00
No. 864		211.00		562.00
				24,294.00
Less: Undeposited receipts				3,905.00
Unadjusted balance per bank, October 31				20,389.00
Less: Bank credit memorandum				218.00
Cash balance per bank statement, October 31				$20,171.00

(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 choose the accounting period For the Month Ended October 31, 2017October 31, 2017For the Year Ended October 31, 2017
select an opening name for section one Adjusted balance per bankUndeposited receiptsBalance per bank statementOutstanding checksTheftBank credit (collection of note receivable)					$enter a dollar amount
select between addition and deduction AddLess :	select a reconciling item TheftBank credit (collection of note receivable)Balance per bank statementAdjusted balance per bankUndeposited receiptsOutstanding checks				enter a dollar amount
					enter a subtotal of the two previous amounts
select between addition and deduction AddLess :	select a reconciling item Outstanding checksBank credit (collection of note receivable)TheftAdjusted balance per bankBalance per bank statementUndeposited receipts
	select a Check Number No. 62 No. 183 No. 284 No. 862 No. 863 No. 864 No. 63 No. 184 No. 285		$enter a dollar amount
	select a Check Number No. 62 No. 183 No. 284 No. 862 No. 863 No. 864 No. 63 No. 184 No. 285		enter a dollar amount
	select a Check Number No. 62 No. 183 No. 284 No. 862 No. 863 No. 864 No. 63 No. 184 No. 285		enter a dollar amount
	select a Check Number No. 62 No. 183 No. 284 No. 862 No. 863 No. 864 No. 63 No. 184 No. 285		enter a dollar amount
	select a Check Number No. 62 No. 183 No. 284 No. 862 No. 863 No. 864 No. 63 No. 184 No. 285		enter a dollar amount
	select a Check Number No. 62 No. 183 No. 284 No. 862 No. 863 No. 864 No. 63 No. 184 No. 285		enter a dollar amount
					enter a total amoutn for this reconciling item
select a closing name for section one Balance per bank statementAdjusted balance per bankUndeposited receiptsOutstanding checksBank credit (collection of note receivable)Theft					$enter a total amount for the first section
select an opening name for section two Adjusted balance per booksCash balance per booksUndeposited receiptsBank credit (collection of note receivable)Outstanding checksTheftAdjusted balance per books (before theft)					$enter a dollar amount
select between addition and deduction AddLess :	select a reconciling item Bank credit (collection of note receivable)Adjusted balance per books (before theft)Adjusted balance per booksTheftOutstanding checksCash balance per booksUndeposited receipts				enter a dollar amount
select a reconciling item TheftOutstanding checksAdjusted balance per books (before theft)Cash balance per booksAdjusted balance per booksUndeposited receiptsBank credit (collection of note receivable)					enter a subtotal of the two previous amounts
select between addition and deduction AddLess :	select a reconciling item TheftAdjusted balance per booksBank credit (collection of note receivable)Cash balance per booksUndeposited receiptsOutstanding checksAdjusted balance per books (before theft)				enter a dollar amount
select a closing name for section two Bank credit (collection of note receivable)Outstanding checksUndeposited receiptsAdjusted balance per booksTheftAdjusted balance per books (before theft)Cash balance per books					$enter a total amount for the second section

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