Solution for QID #17338: Lynn Cavender owns Cavender Boot City. She fears that a trus | StudyHelpMe

Lynn Cavender owns Cavender Boot City. She fears that a trusted employee has been stealing from the company. This employee receives cash from customers and also prepares the monthly bank reconciliation. To check up on the employee, Cavender prepares her own bank reconciliation, as shown. This reconciliation is both complete and accurate, based on the available data. CAVENDER’S BOOT CITY Bank Reconciliation January 31, 2012 Bank Books Balance, January 31 $ 1,500 Balance, January 31 $ 1,050 Add: Deposit in transit 410 Add: Bank collection 790 Less: Outstanding checks 1,080 Interest revenue 15 Adjusted bank balance $ 830 Less: Service charge 20     Adjusted book balance $ 1,835 Requirements 1. How is the preparation of a bank reconciliation considered to be a control device? 2. Which side of the reconciliation shows the true cash balance? 3. What is Cavender’s true cash balance? 4. Does it appear that the employee has stolen from the company? 5. If so, how much? Explain your answer.