Identifying internal control weakness in cash receipts Seawind Productions makes all sales on credit. Cash receipts arrive by mail. Justin Broadway, the mailroom clerk, opens envelopes and separates the checks from the accompanying remittance advice. Broadway forwards the checks to another employee, who makes the daily bank deposit but has no access to the accounting records. Broadway sends the remittance advice, which show cash received, to the accounting department for entry in the accounts. Broadway’s only other duty is to grant sales allowances to customers. (A sales allowance decreases the customer’s account receivable.) When Broadway receives a customer check for $600 less than a $30 allowance, he records the sales allowance and forwards the document to the accounting department. Requirements Identify the internal control weakness in this situation. Who should record sales allowances? What is the amount that should be shown in the ledger for cash receipts?<
Identifying internal control weakness in cash receipts Seawind Productions makes all sales on credit. Cash receipts arrive by mail. Justin Broadway, the mailroom clerk, opens envelopes and separates the checks from the accompanying remittance advice. Broadway forwards the checks to another employee, who makes the daily bank deposit but has no access to the accounting records. Broadway sends the remittance advice, which show cash received, to the accounting department for entry in the accounts. Broadway’s only other duty is to grant sales allowances to customers. (A sales allowance decreases the customer’s account receivable.) When Broadway receives a customer check for $600 less than a $30 allowance, he records the sales allowance and forwards the document to the accounting department. Requirements Identify the internal control weakness in this situation. Who should record sales allowances? What is the amount that should be shown in the ledger for cash receipts?<
Century 21 Accounting General Journal
11th Edition
ISBN:9781337680059
Author:Gilbertson
Publisher:Gilbertson
Chapter11: Accounting For Transactions Using A General Journal
Section: Chapter Questions
Problem 1AFE
Related questions
Question
Identifying internal control weakness in cash receipts
Seawind Productions makes all sales on credit. Cash receipts arrive by mail. Justin Broadway, the mailroom clerk, opens envelopes and separates the checks from the accompanying remittance advice. Broadway forwards the checks to another employee, who makes the daily bank deposit but has no access to the accounting records. Broadway sends the remittance advice, which show cash received, to the accounting department for entry in the accounts. Broadway’s only other duty is to grant sales allowances to customers. (A sales allowance decreases the customer’s account receivable.) When Broadway receives a customer check for $600 less than a $30 allowance, he records the sales allowance and forwards the document to the accounting department.
Requirements
- Identify the internal control weakness in this situation.
- Who should record sales allowances?
- What is the amount that should be shown in the ledger for cash receipts?<
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:
9781337679503
Author:
Gilbertson
Publisher:
Cengage
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:
9781337679503
Author:
Gilbertson
Publisher:
Cengage
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning
Auditing: A Risk Based-Approach (MindTap Course L…
Accounting
ISBN:
9781337619455
Author:
Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:
Cengage Learning
College Accounting, Chapters 1-27
Accounting
ISBN:
9781337794756
Author:
HEINTZ, James A.
Publisher:
Cengage Learning,