Quarter Horse Movers: Where did the money go?

This critical incident describes the events resulting in a small company’s mismatched, unreconcilable financial statements leading to a critical cash shortfall. On the morning of January 2nd, 2024, Geraldo Ramirez the Owner of Quarter Horse Movers (QHM) Inc found himself looking at his online bank balance and wondering where all his cash had gone. Geraldo’s company bank statement showed a balance of less than $3,000, compared to a recently run Balance Sheet and Statement of Cash Flows that showed more than $119,000 of cash on hand. A mere two nights earlier on New Year’s Eve, Geraldo had been toasting a successful business year. The case reviews QHM Inc’s 2022 and 2023 issues with and the consequences of poor bookkeeping personnel choices, processes, and accounting methods. QHM Inc’s reputation and top line have grown significantly. Over the past year, Geraldo has tripled his trucks and trailers to support his demand. Geraldo’s goals for 2024 are to achieve 15% Net Profit Margin, generating $10,000 to $12,000 in reconcilable free cash flow per month, simultaneously he acknowledges that he cannot achieve his financial goals and stability under his current accounting procedures and system. An immediate accounting change must be made!