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E9-15 Identifying and correcting internal Suppose The Right Rig Dealership is opening a regional office in Omaha. Cary Regal, the office manager, is designing the internal control system. Regal proposes the follow- ing procedures for credit checks on new customers, sales on account, cash collections, and write-offs of uncollectible receivables: The credit department runs a credit chcck on all customers who apply for credit. When an account proves uncollectible, the credit department authorizes the write- off of the accounts receivable. Cash receipts come into the credit department, which separates the cash received from the customer remittance slips. The credit department lists all cash receipts by customer name and amount of cash received. The cash goes to the treasurer for deposit in the bank. The remittance slips go to the accounting department for posting to customer accounts. The controller compares the daily deposit slip to the total amount posted to must 30ree

E9-15 Identifying and correcting internal Suppose The Right Rig Dealership is opening a regional office in Omaha. Cary Regal, the office manager, is designing the internal control system. Regal proposes the follow- ing procedures for credit checks on new customers, sales on account, cash collections, and write-offs of uncollectible receivables: The credit department runs a credit chcck on all customers who apply for credit. When an account proves uncollectible, the credit department authorizes the write- off of the accounts receivable. Cash receipts come into the credit department, which separates the cash received from the customer remittance slips. The credit department lists all cash receipts by customer name and amount of cash received. The cash goes to the treasurer for deposit in the bank. The remittance slips go to the accounting department for posting to customer accounts. The controller compares the daily deposit slip to the total amount posted to must 30ree

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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How do I solve E9-15
E9-15 Identifying and correcting internal control weakness Suppose The Right Rig Dealership is opening a regional office in Omaha. Cary Regal. the office manager, is designing the internal control system. Regal proposes the follow- ing procedures for credit checks on new customers, sales on account, cash collections, and write-offs of uncollectible receivables: The credit department runs a credit check on all customers who apply for credit. When an account proves uncollectible, the credit department authorizes the write- off of the accounts receivable. Cash receipts come into the credit department, which separates the cash received from the customer remittance slips. The credit department lists all cash receipts by customer name and amount of cash received. The cash goes to the treasurer for deposit in the bank. The remittance slips go to the accounting department for posting to customer accounts. The controller compares the daily deposit slip to the total amount posted to customer accounts. Both amounts must agree. Recall the components of internal control. Identify the internal control weakness in this situation, and propose a way to correct it. E9-16 Recording credit sales and collections Steller Company had the following transactions in June: Sold merchandise inventory on account to Carter Company, $1,575. Sold merchandise inventory for cash, $550. Jun. 1 12 Received cash from Carter Company in full settlement of its 20 Sold merchandise inventory on account to Iris Company, $7 22 Sold merchandise inventory on account to Driver Company Received cash from Iris Company in partial settlement of its acc $300. 28
Transcribed Image Text:E9-15 Identifying and correcting internal control weakness Suppose The Right Rig Dealership is opening a regional office in Omaha. Cary Regal. the office manager, is designing the internal control system. Regal proposes the follow- ing procedures for credit checks on new customers, sales on account, cash collections, and write-offs of uncollectible receivables: The credit department runs a credit check on all customers who apply for credit. When an account proves uncollectible, the credit department authorizes the write- off of the accounts receivable. Cash receipts come into the credit department, which separates the cash received from the customer remittance slips. The credit department lists all cash receipts by customer name and amount of cash received. The cash goes to the treasurer for deposit in the bank. The remittance slips go to the accounting department for posting to customer accounts. The controller compares the daily deposit slip to the total amount posted to customer accounts. Both amounts must agree. Recall the components of internal control. Identify the internal control weakness in this situation, and propose a way to correct it. E9-16 Recording credit sales and collections Steller Company had the following transactions in June: Sold merchandise inventory on account to Carter Company, $1,575. Sold merchandise inventory for cash, $550. Jun. 1 12 Received cash from Carter Company in full settlement of its 20 Sold merchandise inventory on account to Iris Company, $7 22 Sold merchandise inventory on account to Driver Company Received cash from Iris Company in partial settlement of its acc $300. 28
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