chapter06probsetc

# chapter06probsetc - PROBLEM SET C PROBLEM 6-1C For each of...

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PROBLEM SET C PROBLEM 6-1C For each of these five separate cases, identify the principle of internal control that is violated. Recommend what the business should do to ensure adherence to principles of internal control. 1. Ellen O’Doul records all incoming customer cash receipts for his employer and writes off uncollectible accounts at year-end. 2. At Kelly’s Deli, Kelly and Betty work the cash registers and bag groceries. To alleviate the boredom they switch off between bagging and running the cash register every half hour. 3. Roman Delight does all the posting of accounts payable charges at the Mosquito Motel. She prepares the accounts payable vouchers for payment, signs the vouchers, and writes the checks. 4. Jessica Jacobs prides herself on hiring quality workers who require little supervision. She sees no reason to insult her best cashier by requiring approval signatures on such small amounts as petty cash disbursements and replenishment. 5. Hector Spector has just calculated the total amount his business has paid in insurance premiums over the last ten years. His actual insurance claims have only been 10% of the total paid. He decides to self-insure and save on premiums. PROBLEM 6-2C Quelch Company set up a petty cash fund for payments of small amounts. The following transactions involving the petty cash fund occurred in April (the last month of the company’s fiscal year) April 1 Prepared a company check for \$500 to establish the petty cash fund. 15 Prepared a company check both to replenish the fund for the following expenditures made since April 1 and to increase the fund to \$700. a. Paid \$156 for janitorial services b. Paid \$127.36 for miscellaneous expenses c. Paid postage expenses of \$87.00 d. Paid \$114.30 for newspaper advertisements. e. Counted \$22.30 remaining in the petty cash box. 30 The petty cashier reports that \$386.78 cash remains in the fund and decides that the April 15 increase in the fund was too large. A company check is drawn to both replenish the fund for the following expenditures since April 15

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chapter06probsetc - PROBLEM SET C PROBLEM 6-1C For each of...

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