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# Calculating the Stolen Amount from Cripple Creek Company

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Cripple Creek Company has one trusted employee who, as the owner said, "handles all of the bookkeeping and paperwork for the company." This employee is responsible for counting, verifying, and recording cash receipts and payments, making the weekly bank deposit, preparing checks for major expenditures, making small expenditures from the cash register for daily expenses, and collecting accounts receivable.

The owners asked the local bank for a \$20,000 loan. The bank asked that an audit be performed covering the year just ended. The independent auditor (a local CPA), in a private conference with the owner, presented some evidence of the following activities of the trusted employee during the past year:

-Sales sometimes were not entered in the cash register, and the trusted employee pocketed approximately \$50 per month.
-Cash taken from the cash register (and pocketed by the trusted employee) was replaced with expense memos with fictitious signatures (approximately \$25 per week).
-\$300 collected on an account receivable from a valued out-of-town customer was pocketed by the trusted employee and was covered by making a \$300 entry as a debit to Sales Returns and a credit to Accounts Receivable.
-\$800 collected on accounts receivable from a local customer was pocketed by the trusted employee and was covered by making an \$800 entry by a debit to Sales Discounts and a credit to Accounts Receivable.

1. What was the approximate amount stolen during the past year?
2. How should the owner handle this situation presuming the trusted employee can file a labor dispute contending termination due to discrimination or harassment?

#### Solution Preview

1) Approximate stolen amount:

\$50* 12 months= \$600 on account of missing sales in the cash register
\$25*52 weeks= \$1300 on account of expense memos with fictitious signatures.
\$300+ \$800=\$1100 on account of false discounts and sales returns

Total= \$3000 ...

#### Solution Summary

This solution provides simple calculations and explanation for determining the amount stolen. This solution also discusses how the owner can handle this situation in 125 words.

\$2.19