What is the adjusting entry on the book of the company?
Q. The cashier-bookkeeper had misappropriated 30000 and an additional 10000 by charging sales discounts and crediting accounts receivable. Also, can you please explain what originally happened on this transaction? A. An adjusting entry is needed to comply with matching principle which requires that all revenues earned should be matched with the expenses incurred to generate that revenue.. In this case, the business has incurred a loss resulting in decrease in the assets. An entry is required to record this loss, However, before recording a loss, it must be made clear that: 1. Is the business insured against the loss by theft? If so make a claim with insurance company 2. Since the loss amounts to a criminal act, a report must be lodged with the police. 3. Assist the police in locating the culprit and recover as much money as possible. The loss will recorded as follows: Debit Loss by theft - admin expense Credit Cash Credit Accounts receivable The amounts will depend on the actual loss...