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 company’s 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. 863226.00
no. 864165.00481.00

22,348.00
less: undeposited receipts3,795.00
unadjusted balance per bank, october 3118,553.00
less: bank credit memorandum185.00
cash balance per bank statement, october 31$18,368.00
required:
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.)