Select your language

Suggested languages for you:
Log In Start studying!
Answers without the blur. Just sign up for free and you're in → Illustration

2E_1

Expert-verified
Financial & Managerial Accounting
Found in: Page 307
Financial & Managerial Accounting

Financial & Managerial Accounting

Book edition 7th
Author(s) John J Wild, Ken W. Shaw, Barbara Chiappetta
Pages 1096 pages
ISBN 9781259726705

Short Answer

What internal control procedures would you recommend in each of the following situations?

1. A concession company has one employee who sells towels, coolers, and sunglasses at the beach. Each day, the employee is given enough towels, coolers, and sunglasses to last through the day and enough cash to make change. The money is kept in a box at the stand.

Answer

On the off chance that a cash register cannot be utilized, the all-out sales worth of the towels, coolers, and sunglasses given to the employee every day ought to be calculated.

See the step by step solution

Step by Step Solution

Step-by-Step SolutionStep 1: Meaning of Internal Control

Internal controls are the systems, rules, and methods executed by an organization to guarantee the integrity of financial and accounting information, advance responsibility, and prevent fraud.

Step 2: Internal control procedures

A cash register (with a locked record) ought to be utilized at the sales stand-it ought to likewise be secured to the stand. The employee should sign a receipt for the product and how much money the individual has been given. At the end of every day, the employee should be expected to return the cash and residual towels, coolers, and sunglasses equivalent to the sum taken to the stand. Possibly consider a couple of return trips, assuming that the sums are large.

Most popular questions for Business-studies Textbooks

Shamara Systems most recently reconciled its bank balance on April 30 and reported two checks outstanding at that time, No. 1771 for $781 and No. 1780 for $1,425.90. The following information is available for its May 31, 2017, reconciliation

From the May 31 Bank Statement PREVIOUS BALANCE TOTAL CHECKS AND DEBITS TOTAL DEPOSITS AND CREDITS CURRENT BALANCE CHECKS AND DEBITS DEPOSITS AND CREDITS 18,290.70 Date 05/01 1771 05/04 No. Amount Date Amount 13,094.80 16,566.80 21,762.70 05/02 1783 05/14 05/04 1782 05/22 1784 05/18 05/26 05/11 05/25 05/25 1787 05/26 1785 05/29 1788 05/31 2,438.00 2,898.00 1,801.80 2,079.00 7,350.00 CM 781.00 382.50 1,285.50 431.80 NSF 8,032.50 63.90 654.00 14.00 SC

From Shamara Systems’s Accounting Records Cash Receipts Deposited Cash Date Debit May 4 2,438.00 14 2,898.00 22 1,801.80 26 2,079.00 31 2,727.30 11,944.10 Cash Disbursements Check Cash No. Credit 1782 1,285.50 1783 382.50 1784 1,449.60 1785 63.90 1786 353.10 1787 8,032.50 1788 644.00 1789 639.50 12,850.60 Cash Acct. No. 101 Date Explanation PR Debit Credit Balance Apr. 30 Balance 16,083.80 May 31 Total receipts R7 11,944.10 28,027.90 31 Total disbursements D8 12,850.60 15,177.30

Additional Information

Check No. 1788 is correctly drawn for $654 to pay for May utilities; however, the recordkeeper misread the amount and entered it in the accounting records with a debit to Utilities Expense and a credit to Cash for $644. The bank paid and deducted the correct amount. The NSF check shown in the statement was originally received from a customer, W. Sox, in payment of her account. The company has not yet recorded its return. The credit memorandum (CM) is from a $7,400 note that the bank collected for the company. The bank deducted a $50 collection expense and deposited the remainder in the company’s account. The collection and expense have not yet been recorded.

Required

2. Prepare the journal entries (in dollars and cents) to adjust the book balance of cash to the reconciled balance.

Icon

Want to see more solutions like these?

Sign up for free to discover our expert answers
Get Started - It’s free

Recommended explanations on Business-studies Textbooks

94% of StudySmarter users get better grades.

Sign up for free
94% of StudySmarter users get better grades.