Financial Accounting (12th Edition) (What's New in Accounting)
12th Edition
ISBN: 9780134725987
Author: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 4, Problem 4.17AE
To determine
To identify: The internal control weaknesses in the given situation, state the losses to Company L due to the weaknesses, and recommend to control weakness
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
immy Pace has recently been hired as the manager of Jittery Jon’s Coffee Shop. Jittery Jon’s Coffee Shop is a national chain of franchised coffee shops. During his first month as store manager, Jimmy encountered the following internal control situations:a.Jittery Jon’s Coffee Shop has one cash register. Prior to Jimmy’s joining the coffee shop, each employee working on a shift would take a customer order, accept payment, and then prepare the order. Jimmy made one employee on each shift responsible for taking orders and accepting the customer’s payment. Other employees prepare the orders.b.Because only one employee uses the cash register, that employee is responsible for counting the cash at the end of the shift and verifying that the cash in the drawer matches the amount of cash sales recorded by the cash register. Jimmy expects each cashier to balance the drawer to the penny every time—no exceptions.c.Jimmy caught an employee putting a case of 1,000 single-serving tea bags in her car.…
Jimmy Pace has recently been hired as the manager of Jittery Jon’s Coffee Shop. Jittery Jon’s Coffee Shop is a national chain of franchised coffee shops. During his first month as store manager, Jimmy encountered the following internal control situations:
a. Jittery Jon’s Coffee Shop has one cash register. Prior to Jimmy’s joining the coffee shop, each employee working on a shift would take a customer order, accept payment, and then prepare the order. Jimmy made one employee on each shift responsible for taking orders and accepting the customer’s payment. Other employees prepare the orders.
b. Because only one employee uses the cash register, that employee is responsible for counting the cash at the end of the shift and verifying that the cash in the drawer matches the amount of cash sales recorded by the cash register. Jimmy expects each cashier to balance the drawer to the penny every time—no exceptions.
c. Jimmy caught an employee putting a case of 1,000 single-serving tea bags in…
Jimmy Pace has recently been hired as the manager of Jittery Jon’s Coffee Shop. Jittery Jon’s Coffee Shop is a national chain of franchised coffee shops. During his first month as store manager, Jimmy encountered the following internal control situations:a. Jittery Jon’s Coffee Shop has one cash register. Prior to Jimmy’s joining the coffee shop, each employee working on a shift would take a customer order, accept payment, and then prepare the order. Jimmy made one employee on each shift responsible for taking orders and accepting the customer’s payment. Other employees prepare the orders.b. Because only one employee uses the cash register, that employee is responsible for counting the cash at the end of the shift and verifying that the cash in the drawer matches the amount of cash sales recorded by the cash register. Jimmy expects each cashier to balance the drawer to the penny every time—no exceptions.c. Jimmy caught an employee putting a case of 1,000 single-serving tea bags in her…
Chapter 4 Solutions
Financial Accounting (12th Edition) (What's New in Accounting)
Ch. 4 - Prob. 1QCCh. 4 - Prob. 2QCCh. 4 - Prob. 3QCCh. 4 - Prob. 4QCCh. 4 - Prob. 5QCCh. 4 - Prob. 6QCCh. 4 - Prob. 7QCCh. 4 - Why does cash require some specific internal...Ch. 4 - Prob. 9QCCh. 4 - Prob. 10QC
Ch. 4 - Prob. 11QCCh. 4 - Prob. 12QCCh. 4 - Prob. 4.1ECCh. 4 - Prob. 4.1SCh. 4 - Prob. 4.2SCh. 4 - (Learning Objective 2: Describe objectives and...Ch. 4 - Prob. 4.4SCh. 4 - (Learning Objective 2: Explain the objectives and...Ch. 4 - (Learning Objective 3: Evalue internal controls...Ch. 4 - Prob. 4.7SCh. 4 - Prob. 4.8SCh. 4 - Prob. 4.9SCh. 4 - Prob. 4.10SCh. 4 - Prob. 4.11SCh. 4 - Prob. 4.12SCh. 4 - Prob. 4.13SCh. 4 - Prob. 4.14SCh. 4 - Prob. 4.15AECh. 4 - Prob. 4.16AECh. 4 - Prob. 4.17AECh. 4 - Prob. 4.18AECh. 4 - Prob. 4.19AECh. 4 - Prob. 4.20AECh. 4 - Prob. 4.21AECh. 4 - Prob. 4.22BECh. 4 - Prob. 4.23BECh. 4 - Prob. 4.24BECh. 4 - (Learning Objectives 1, 2, 3: Describe fraud and...Ch. 4 - Prob. 4.26BECh. 4 - Prob. 4.27BECh. 4 - Prob. 4.28BECh. 4 - Prob. 4.29QCh. 4 - Prob. 4.30QCh. 4 - Prob. 4.31QCh. 4 - Prob. 4.32QCh. 4 - Prob. 4.33QCh. 4 - Prob. 4.34QCh. 4 - Prob. 4.35QCh. 4 - Prob. 4.36QCh. 4 - Prob. 4.37QCh. 4 - Prob. 4.38QCh. 4 - Prob. 4.39QCh. 4 - Prob. 4.40QCh. 4 - Prob. 4.41APCh. 4 - Prob. 4.42APCh. 4 - Prob. 4.43APCh. 4 - Prob. 4.44APCh. 4 - Prob. 4.45BPCh. 4 - (Learning Objectives 2, 3: Explain the objectives...Ch. 4 - (Learning Objective 3: Evaluate internal controls)...Ch. 4 - Prob. 4.48BPCh. 4 - Prob. 4.49CEPCh. 4 - Prob. 4.50CEPCh. 4 - Prob. 4.51SCCh. 4 - Prob. 4.52DCCh. 4 - Prob. 4.53DCCh. 4 - Prob. 4.54EICCh. 4 - Prob. 1FFCh. 4 - Prob. 1FA
Knowledge Booster
Similar questions
- draw the system flow chart for the following narrative? Cornick, Inc. sells office products to businesses in the eastern region of the United States. Each month, the IT division at Cornick prints monthly statements and sends them to the accounts receivable (AR) department, where a clerk mails them to the customers. Cornick’s custo- mers mail their payments back to Cornick, where a clerk in AR batches the checks and sends them to the cashier. The AR clerk then uses the payment stub to enter the payments into the computer, where the AR master data are updated to record the paymentarrow_forwardBelow are several scenarios related to control activities of a company.1. A manufacturing company compares total sales in the current year to those in the previous year but does not compare the cost of production.2. So that employees can have easy access to office supplies, a company keeps supplies in unlocked cabinets in multiple locations.3. At the end of each day, a single employee collects all cash received from customers, records the total, and makes the deposit at the bank.4. At the end of the year only, the company compares its cash records to the bank’s records of cash deposited and withdrawn during the year.5. A company encourages employees to call an anonymous hotline if they believe other employees are circumventing internal control features.6. All employees have the authority to refund a customer’s money.Required:For each scenario, determine which control activity is violated. Control activities include separation of duties, physical controls, proper authorization, employee…arrow_forwardOnce a month, the sales department sends sales invoices to the accounting department to be recorded. Greg Mursky orders merchandize for Ross Company; he also receives merchandize and authorizes payment for merchandize. Several clerks at Terando’s Grocery use the same cash register drawer. Disbursement Vouchers (DVs) supported by reproduced copy of pertinent documents were presented during DVs processing. Cash collections made by the cashier were deposited every other day instead of next working day as a matter of policy. Lisa’s Pizza operates strickly on a carryout basis. Customers pick up thier orders at a counter where a clerk exchanges the pizza for cash. While at the counter, the customer can see other employees making the pizze and the large ovens in which the pizzas are baked. Intruction: Identify the six principles of internal control and give an example of each principle that you might observe when picking up your pizzas.arrow_forward
- Halle's Berry Farm establishes a $350 petty cash fund on September 4 to pay for minor cash expenditures. The fund is replenished at the end of each month. At the end of September, the fund contains $273 in cash. The company has also issued a credit card and authorized its office manager to make purchases. Expenditures for the month include the following items: Entertainment for office party (petty cash) Repairs and maintenance (credit card) Postage (credit card) Delivery cost (credit card) Required: 1. Record the establishment of the petty cash fund on September 4. 2. Record credit card expenditures during the month. The credit card balance is not yet paid. 3. Record petty cash expenditures during the month. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet ere to search F2 2 W 1 S 2 Record the establishment of the petty cash fund on September 4. F3 #m 3 3 E D 100 Et F4 $ 4 F5…arrow_forwardHolly employees use a time clock in an unsupervised area to record their time on the job. The timekeeping clerk tries to monitor the process but is often distracted by other duties. Every Friday, the shop foremen collect the time cards for their subordinates, review and approve them, and deliver them to the payroll clerk. The payroll clerk uses a stand-alone PC to record the employee earnings in the employee records and print a hard-copy payroll register. The payroll clerk sends one copy of the payroll register to the accounting department. The clerk then files the time cards and a copy of the payroll register in the payroll department. The accounting department clerk receives the payroll register, reviews it for accuracy, and uses the department computer to record the transaction by posting to subsidiary and GL accounts, including wages expense, cash, and various withholding accounts. The clerk then prints the hard-copy checks, which are written on the general cash account. The clerk…arrow_forwardThe following describes the cash receipts procedures for a medium-sized online and catalog-based retailer. Customer payments come directly to the general mail room along with other mail items. The customer payments mail constitutes about 20 percent of the total mail received each day. The mail room clerks sort through the mail, open the customer payment envelopes, remove the customer checks and remittance advices, and reconcile the two documents. The mail room supervisor then sends the reconciled checks and remittance advices to the AR clerk, who posts the amounts received to the customer AR subsidiary ledger and the cash receipts journal from her computer terminal. The AR clerk then manually prepares a remittance list of all checks received, endorses the checks “for deposit only” and sends the checks and remittance list to the treasurer. Finally, the clerk files the remittance advices in the AR department. Once the checks and remittance list arrive at the Treasury department, the…arrow_forward
- Case Study: Hassam runs a fruit stall at the local market and at the end of each day he banks the cash in the cash register. the cash register records each sale and can provide a total for each day but Hassam believes that often the staffs are too busy and do not always enter the sales in the cash register but simply put the cash in the till. the total from the cash register is produced each month for the budiness's accountant to prepare financial statements. Recently, Hassam employed a university student to work on weekends and he is concerned that after this the daily amount banked seems to have decreased even though Hassam feels that sales have not really changed. the student often talks about how he spends his evenings at the casino in the hope of winning enough to pay for his university studies so that he doesn't have to work every weekend. reqiured: please answer this question by listing to Hassam 5 controls he could put in place to minimize the risk of one of his employees…arrow_forwardBradford College has several sites and employs hundreds of teaching staff. The college has recently discovered a serious fraud involving false billings for part-time teaching. The fraud involved two members of staff. Noel is a clerk in the payroll office who is responsible for processing payments to part-time teaching staff. Ruth is the Head of the Business Studies department at the college campus. Part-time lecturers are required to complete a monthly claim form which lists the classes taught and the total hours claimed. These forms must be signed by their Head of Department, who sends all signed forms to Noel. Noel checks that the class codes on the claim forms are valid, that hours have been budgeted for those classes and inputs the information into the college’s payroll package. The college has a separate personnel department that is responsible for maintaining all personnel files. Additions to the payroll must be made by a supervisor in the personnel office. The payroll package is…arrow_forwardClooney Corp. establishes a petty cash fund for $225 and issues a credit card to its office manager. By the end of the month, employees made one expenditure from the petty cash fund (entertainment, $25) and three expenditures with the credit card (postage, $60; delivery, $85; supplies expense, $50). Separately record employee credit card expenditures and employee petty cash expenditures. The credit card balance will be paid later.arrow_forward
- The Alvarez Manufacturing Company has three employees who work in the warehouse. all the warehouse workers are authorized to order inventory when it falls below the reorder level. The workers complete a purchase order and mail it to the supplier of their choice. The inventory is delivered directly to the warehouse. The workers send a memo to accounts payable reporting the receipt of inventory. Accounts payable compares the warehouse memo to the supplier invoice. Accounts payable prepare a check which the treasurer signs. Required: Describe at least 3 needed internal control improvements.arrow_forwardThe following procedures were recently implemented by SUP Yoga Co.: Each cashier is assigned a separate cash register drawer to which no other cashier has access. All sales are rung up on the cash register, and a receipt is given to the customer. All sales are recorded on a record locked inside the cash register. At the end of a shift, each cashier counts the cash in his or her cash register, unlocks the cash register record, and compares the amount of cash with the amount on the record to determine cash shortages and overages. Checks received through the mail are given daily to the accounts receivable clerk for recording collections on account and for depositing in the bank. Vouchers and all supporting documents are stamped PAID after being paid by the treasurer. Disbursements are made from the petty cash fund only after a petty cash receipt has been completed and signed by the payee. The bank reconciliation is prepared by the accountant. Instructions: Indicate whether each of the…arrow_forwardHalle’s Berry Farm establishes a $200 petty cash fund on September 4 to pay for minor cash expenditures. The fund is replenished at the end of each month. At the end of September, the fund contains $30 in cash. The company has also issued a credit card and authorized its office manager to make purchases. Expenditures for the month include the following items:Entertainment for office party (petty cash) $170Lawn maintenance (credit card) 420Postage (credit card) 575Fuel for deliveries (credit card) 285Required:1. Record the establishment of the petty cash fund on September 4.2. Record credit card expenditures during the month. The credit card balance is not yet paid.3. Record petty cash expenditures during the month.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Auditing: A Risk Based-Approach to Conducting a Q...AccountingISBN:9781305080577Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:South-Western College Pub
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
Auditing: A Risk Based-Approach to Conducting a Q...
Accounting
ISBN:9781305080577
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:South-Western College Pub
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
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