Financial and Managerial Accounting
15th Edition
ISBN: 9780357297162
Author: Carl S. Warren; Jefferson P. Jones; William B. Tayler, Ph.D., CMA
Publisher: Cengage Learning US
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Question
Chapter 10, Problem 15E
To determine
State whether each of the procedures is appropriate or inappropriate, after considering the principles of internal control.
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Internal control procedures
Dave's Scooters is a small manufacturer of specialty scooters. The company employs 14 production workers and four administrative persons. The following procedures are used to
process the company's weekly payroll:
a. Whenever an employee receives a pay raise, the supervisor must fill out a wage adjustment form, which is signed by the company president. This form is used to change the
employee's wage rate in the payroll system.
b. All employees are required to record their hours worked by clocking in and out on a time clock. Employees must clock out for lunch break. Due to congestion around the time
clock area at lunch time, management has not objected to having one employee clock their entire department in and out.
c. Whenever a salaried employee is terminated, Personnel authorizes Payroll to remove the employee from the payroll system. However, this procedure is not required when an
hourly worker is fired. Hourly employees only receive a paycheck if their…
Dave’s Scooters is a small manufacturer of specialty scooters. The company employs 14 production workers and four administrative persons. The following procedures are used to process the company’s weekly payroll:a. Whenever an employee receives a pay raise, the supervisor must fill out a wage adjustment form, which is signed by the company president. This form is used to change the employee’s wage rate in the payroll system.b. All employees are required to record their hours worked by clocking in and out on a time clock. Employees must clock out for lunch break. Due to congestion around the time clock area at lunch time, management has not objected to having one employee clock in and out for an entire department.c. Whenever a salaried employee is terminated, Personnel authorizes Payroll to remove the employee from the payroll system. However, this procedure is not required when an hourly worker is fired. Hourly employees only receive a paycheck if their time cards show hours worked.…
7. REA MODEL—CRYOGENICS’ PAYROLL SYSTEM Based on the general information about Cryogenics Inc., in Problem 6, the following describes the com- pany’s payroll procedures for the Tulsa OK, operations. Twice each month Cryogenics’ employees submit their time cards to their respective supervisor, who reviews, approves, and submits them to the payroll department. At that time, the human resources clerk also submits a personnel action form to the payroll clerk. The payroll clerk enters the information from these source documents into the employee records and then adds the employee hours to a payroll regis- ter reflecting employee pay rates, deductions, and job classification. One copy of the payroll register, along with the time cards, is filed in the payroll department, and one copy is sent to the AP depart- ment. Next, the payroll clerk prepares the employee paychecks and the payroll register and sends them to the cash disbursements department. The cash disbursement clerk signs the checks…
Chapter 10 Solutions
Financial and Managerial Accounting
Ch. 10 - Does a discounted note payable provide credit...Ch. 10 - Employees are subject to taxes withheld from their...Ch. 10 - Prob. 3DQCh. 10 - Prob. 4DQCh. 10 - Prob. 5DQCh. 10 - Prob. 6DQCh. 10 - Prob. 7DQCh. 10 - Installment notes require equal periodic payments....Ch. 10 - Prob. 9DQCh. 10 - Prob. 10DQ
Ch. 10 - On January 26, Nyree Co. borrowed cash from Conrad...Ch. 10 - Prob. 2BECh. 10 - The payroll register of Heritage Co. indicates...Ch. 10 - Prob. 4BECh. 10 - Prob. 5BECh. 10 - Journalizing installment notes On the first day of...Ch. 10 - Estimated warranty liability Quantas Industries...Ch. 10 - Adieu Company reported the following current...Ch. 10 - Bon Nebo Co. sold 30,000 annual subscriptions of...Ch. 10 - Entries for notes payable Bennett Enterprises...Ch. 10 - Evaluating alternative notes A borrower has two...Ch. 10 - A business issued a 120-day, 5% note for 60,000 to...Ch. 10 - A business issued a 60-day note for 60,000 to a...Ch. 10 - Fixed asset purchases with note On June 30,...Ch. 10 - Prob. 7ECh. 10 - An employee earns 30 per hour and 1.5 times that...Ch. 10 - Prob. 9ECh. 10 - Summary payroll data In the following summary of...Ch. 10 - According to a summary of the payroll of Mountain...Ch. 10 - Prob. 12ECh. 10 - Prob. 13ECh. 10 - Prob. 14ECh. 10 - Prob. 15ECh. 10 - Prob. 16ECh. 10 - Prob. 17ECh. 10 - Prob. 18ECh. 10 - Entries for installment note transactions On the...Ch. 10 - Entries for installment note transactions On...Ch. 10 - Prob. 21ECh. 10 - Prob. 22ECh. 10 - Prob. 23ECh. 10 - Prob. 24ECh. 10 - The following items were selected from among the...Ch. 10 - Entries for payroll and payroll taxes The...Ch. 10 - Ehrlich Co. began business on January 2. Salaries...Ch. 10 - Prob. 4PACh. 10 - Payroll accounts and year-end entries The...Ch. 10 - Liability transactions The following items were...Ch. 10 - Entries for payroll and payroll taxes The...Ch. 10 - Wage and tax statement data and employer FICA tax...Ch. 10 - Prob. 4PBCh. 10 - Payroll accounts and year-end entries The...Ch. 10 - Prob. 1COMPCh. 10 - Amazon.com, Inc. (AMZN) is one of the largest...Ch. 10 - Prob. 2MADCh. 10 - Prob. 3MADCh. 10 - Neiman Marcus Group (NMG) is one of the largest...Ch. 10 - Prob. 5MADCh. 10 - Prob. 1TIFCh. 10 - Prob. 2TIFCh. 10 - Communication WBM Motorworks is a manufacturer of...Ch. 10 - Prob. 5TIF
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- Matt Demko is the loading dock supervisor for a dry cement packaging company. His work crew is composed of unskilled workers who load large transport trucks with bags of cement, gravel, and sand. The work is hard, and the employee turnover rate is high. Employees record their attendance on separate time cards. Demko authorizes payroll payments each week by signing the time cards and submitting them to the payroll department. Payroll then prepares the paychecks and gives them to Demko, who distributes them to his work crew. a. Prepare a systems flowchart of the procedures described here. b. Identify any control problems in the system. c. What sorts of fraud are possible in this system?arrow_forwardEmployees at the Sagerod Manufacturing Company record their hours worked on paper time cards that are inserted into a time clock machine at the beginning and end of each shift. On Fridays, the supervisor collects the time cards, reviews and signs them, and sends them to the payroll clerk. The clerk calculates the pay for each employee and updates the employee earnings file. This involves adding a new record for each employee in the pay period that reflects the employee’s gross pay, tax deductions, and other withholdings for the period. The clerk then prepares a paycheck for each employee and records them in the check register. The check register and corresponding paychecks reflect each employee’s net earnings for the period. Based on these records, the clerk prepares a payroll summary, which is sent with the paychecks to the cash disbursements clerk. The clerk reviews the payroll summary, updates the cash disbursements journal to record the total payroll, and prepares a check for the…arrow_forwardFlorenzo Corp. is a small manufacturing firm with 60 employees in seven departments. When the need arises for new workers in the plant, the departmental manager interviews applicants and hires on the basis of those interviews. The manager has each new employee complete a withholding form. The manager then writes the rate of pay on the W‐4 and forwards it to payroll. When workers arrive for their shift, they pull their time cards from a holder near the door and keep the time card with them during the day to complete the start and end times of their work day. On Friday, the time cards are removed from the holder and taken to payroll by any employee who is not busy that morning. If there were any pay rate changes for the payroll period due to raises or promotions, the manager calls the payroll department to inform payroll of these rate changes. Using the rate changes and the time cards, the payroll department prepares the checks from the regular bank account of Florenzo Corp. The manager…arrow_forward
- A Forman of a construction company is responsible for a construction crew comprised of many unskilled workers. The work is hard, and the employee turnover rate is high with individuals often leaving without notice. Throughout the workweek, employees record their attendance on separate time cards, which the foreman approves and submits to the payroll department at the end of the week. Based on the time cards, the payroll department prepares the paychecks and sends them to the foreman who then distributes the checks to his work crew. 1) Identify the segregation of duties problems in the system.arrow_forwardEvery 2 weeks, employees for a manufacturing firm submit their time cards to the supervisor, who reviews and approves them. They are the submitted to the payroll department. At that time, the human resources clerk also submits a personnel action to the payroll clerk. The payroll clerk enters the information from these source documents into the employee records and then adds the employee hours to a payroll register reflecting employee pay rates, deductions, and job classification. One copy of the payroll register, along with the time cards, is filed in the payroll department, and one copy is sent to the AP department.Next the payroll clerk sends the employee paychecks to the cash disbursements department. The checks are signed and distributed to the employees by the paymaster. The AP department prepares a cash disbursements voucher. A copy of the voucher and a copy of the payroll register are sent to the cash disbursements department and are then posted to the general ledger. The cash…arrow_forwardTopic: payroll processing and fixed asset procedure Subject: accounting information systemarrow_forward
- Using this supplemental information, analyze the flowchart in the diagram. The personnel department determines the wage rate of all employees. To start the process, personnel sends the payroll coordinator, George Jones, an authorization form in order to add an employee to the payroll. After Jones enters this information into the system, the computer automatically determines the overtime and shift differential rates for the individual, updating the payroll master files. Employees use a time clock to record the hours worked. Every Monday morning, George Jones collects the previous week’s time cards and begins the computerized processing of payroll information to produce paychecks the following Friday. Jones then reviews the time cards to ensure that the hours worked are correctly totaled; the system determines overtime and/or any shift differential. Jones performs all other processes displayed on the flowchart. The system automatically assigns a sequential number to each payroll check…arrow_forwardProvide FOUR objectives of the internal control that should be exercised over a wages system.arrow_forwardThe Tennis Club Company makes custom tennis rackets. The manufacturing supervisor interviews people who have specialized manufacturing skills for recruitment, and he informs payroll when an employee is hired. The employees punch a card to a time clock to record the hours they work. The employees are also required to keep a record of the time they spend working on each order. The supervisor approves all time cards. The accountant analyzes the job tickets and prepares a labor distribution summary. Payroll prepares the payroll register and paychecks. The supervisor distributes the paychecks to the employees. Payroll informs cash disbursement of the funds required to cover the entire payroll amount. The cash disbursements clerk ensures that there are adequate funds in the company's regular checking account to cover the payroll. Required: 1. Identify and discuss three internal control weaknesses. 2. Suggest an improvement to internal control for each weakness.arrow_forward
- 9 List of Statements 1. The payroll department should use personnel action forms (new employees and terminated employees) to validate employees before they are issued a check. 2. Upon completion, the daily time cards are routed to the cost accountants who use them to post the labor costs to specific WIP accounts such as direct labor, indirect labor and overhead. Which of the statement(s) above is(are) invalid? O Both statements are valid O Statement 2 O Statement 1 Both statements are invalid Answer onlyarrow_forwardQuestion: wages and payroll the following system is used in a business regarding payment of the weekly wages to its 20 employees " the pay clerk prepares 20 correctly Labelled, sealed pay envelope and placed them next to the time book every Friday morning. When the employees come in the morning to sign the time book they pick their pay envelopes.' reqiured: please answer this question by: a) with reference to the above, identify one weakness of the system.arrow_forwardThe payroll department is asked to make a payroll summary of the workers employed by A-Z Company. The two workers, Jane and Max work for the selling department and the rest for admin department . Jane also contributes $45 to Canada Bond Saving and has instructed the employer to deduct from her pay. Each worker contributes $25 for Union Dues and $55 for hospital insurance. Further information is given to the accountant. Weekly Pay Employees Hours worked Hourly rate $ John 52 28 Jane 43 35 Max 47 42 REQUIRED Calculate the following Gross salary of each worker Tax to be deducted if the rate is 18% Employment insurance for both employee and employer [1.87%] Canada pension for both employee and employer [4.95%] Make a schedule for the employees using the format. Journalize the pay roll information of employees only. Calculate the total contributions that the employer has to make on his employees in terms of CPP and EIarrow_forward
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