HW Ch 6 solutions - Exercise 6-10(25 minutes WALSH COMPANY...

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Exercise 6-10 (25 minutes) WALSH COMPANY Bank Reconciliation May 31, 2009 Bank statement balance ........... $6,900 Book balance. . ....................... $7,750 Add Deposit of May 31 ............ 1,100 Bank error ..... 200 8,200 Deduct Deduct Outstanding checks ............ 800 Bank service charge ............ 50 _____ NSF check .... 300 Adjusted bank balance ........... $7,400 Adjusted book balance ........... $7,400 Problem 6-1A (20 minutes) 1. Violates separation of duties . The company should implement a policy whereby the person recording incoming cash receipts is not responsible for posting the payments to the customer accounts. 2. Violates the principle of establishing responsibility . Only Jenn should have access to the petty cash fund since she is the custodian. The company should implement a policy of not allowing petty cash transactions over the lunch hour. Alternatively, Kirsten could also serve as a petty cash custodian with her own petty cash fund. 3. Violates the proper application of technological controls . While the daily backup is a very good internal control, the tape needs to be taken off the premises every night.
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