Evaluating internal control over cash receipts: Cash receipts are those payments that customer receives from the sales made. Lock-box system is used by many companies to receive customer payments. In this system, customer sends the cash receipts to the post office boxes that are maintained by the banks. Process of maintaining cash receipts by mail helps the company to have strict internal control. The following are the steps one has to follow when receiving the checks made for the payment sent by mail: Open the incoming mail. Next, send the mail to the treasurer and thus, it is deposited in the bank by the cashier. When there is a receipt of check, cashier gets a deposit receipt. Then, accounting department records all the journal entries. Then, company’s controller compares deposited amount in the bank and cash debited from the accounting department. Thus, these both amounts need to be tallied. To identify: Internal control weakness over cash receipts

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Answer 1

Question

Chapter 7, Problem 7.14E

Requirement 1:

To determine

Evaluating internal control over cash receipts: Cash receipts are those payments that customer receives from the sales made. Lock-box system is used by many companies to receive customer payments. In this system, customer sends the cash receipts to the post office boxes that are maintained by the banks. Process of maintaining cash receipts by mail helps the company to have strict internal control.

The following are the steps one has to follow when receiving the checks made for the payment sent by mail:

Open the incoming mail. Next, send the mail to the treasurer and thus, it is deposited in the bank by the cashier.

When there is a receipt of check, cashier gets a deposit receipt. Then, accounting department records all the journal entries.

Then, company’s controller compares deposited amount in the bank and cash debited from the accounting department. Thus, these both amounts need to be tallied.

To identify: Internal control weakness over cash receipts

Requirement 2:

To determine

Preventive Measures

Expert Solution & Answer

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Answer 2

Question

Chapter 7, Problem 7.14E

Requirement 1:

To determine

Evaluating internal control over cash receipts: Cash receipts are those payments that customer receives from the sales made. Lock-box system is used by many companies to receive customer payments. In this system, customer sends the cash receipts to the post office boxes that are maintained by the banks. Process of maintaining cash receipts by mail helps the company to have strict internal control.

The following are the steps one has to follow when receiving the checks made for the payment sent by mail:

Open the incoming mail. Next, send the mail to the treasurer and thus, it is deposited in the bank by the cashier.

When there is a receipt of check, cashier gets a deposit receipt. Then, accounting department records all the journal entries.

Then, company’s controller compares deposited amount in the bank and cash debited from the accounting department. Thus, these both amounts need to be tallied.

To identify: Internal control weakness over cash receipts

Requirement 2:

To determine

Preventive Measures

Expert Solution & Answer

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See solution

Answer 3

Question

Chapter 7, Problem 7.14E

Requirement 1:

To determine

Evaluating internal control over cash receipts: Cash receipts are those payments that customer receives from the sales made. Lock-box system is used by many companies to receive customer payments. In this system, customer sends the cash receipts to the post office boxes that are maintained by the banks. Process of maintaining cash receipts by mail helps the company to have strict internal control.

The following are the steps one has to follow when receiving the checks made for the payment sent by mail:

Open the incoming mail. Next, send the mail to the treasurer and thus, it is deposited in the bank by the cashier.

When there is a receipt of check, cashier gets a deposit receipt. Then, accounting department records all the journal entries.

Then, company’s controller compares deposited amount in the bank and cash debited from the accounting department. Thus, these both amounts need to be tallied.

To identify: Internal control weakness over cash receipts

Requirement 2:

To determine

Preventive Measures

Expert Solution & Answer

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See solution

Answer 4

Question

Chapter 7, Problem 7.14E

Requirement 1:

To determine

Evaluating internal control over cash receipts: Cash receipts are those payments that customer receives from the sales made. Lock-box system is used by many companies to receive customer payments. In this system, customer sends the cash receipts to the post office boxes that are maintained by the banks. Process of maintaining cash receipts by mail helps the company to have strict internal control.

The following are the steps one has to follow when receiving the checks made for the payment sent by mail:

Open the incoming mail. Next, send the mail to the treasurer and thus, it is deposited in the bank by the cashier.

When there is a receipt of check, cashier gets a deposit receipt. Then, accounting department records all the journal entries.

Then, company’s controller compares deposited amount in the bank and cash debited from the accounting department. Thus, these both amounts need to be tallied.

To identify: Internal control weakness over cash receipts

Requirement 2:

To determine

Preventive Measures

Expert Solution & Answer

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Answer 5

Chapter 7, Problem 7.14E

Requirement 1:

To determine

Evaluating internal control over cash receipts: Cash receipts are those payments that customer receives from the sales made. Lock-box system is used by many companies to receive customer payments. In this system, customer sends the cash receipts to the post office boxes that are maintained by the banks. Process of maintaining cash receipts by mail helps the company to have strict internal control.

The following are the steps one has to follow when receiving the checks made for the payment sent by mail:

Open the incoming mail. Next, send the mail to the treasurer and thus, it is deposited in the bank by the cashier.

When there is a receipt of check, cashier gets a deposit receipt. Then, accounting department records all the journal entries.

Then, company’s controller compares deposited amount in the bank and cash debited from the accounting department. Thus, these both amounts need to be tallied.

To identify: Internal control weakness over cash receipts

Requirement 2:

To determine

Preventive Measures

Answer 6

Chapter 7, Problem 7.14E

Requirement 1:

To determine

Evaluating internal control over cash receipts: Cash receipts are those payments that customer receives from the sales made. Lock-box system is used by many companies to receive customer payments. In this system, customer sends the cash receipts to the post office boxes that are maintained by the banks. Process of maintaining cash receipts by mail helps the company to have strict internal control.

The following are the steps one has to follow when receiving the checks made for the payment sent by mail:

Open the incoming mail. Next, send the mail to the treasurer and thus, it is deposited in the bank by the cashier.

When there is a receipt of check, cashier gets a deposit receipt. Then, accounting department records all the journal entries.

Then, company’s controller compares deposited amount in the bank and cash debited from the accounting department. Thus, these both amounts need to be tallied.

To identify: Internal control weakness over cash receipts

Answer 7

Chapter 7, Problem 7.14E

Requirement 1:

To determine

Evaluating internal control over cash receipts: Cash receipts are those payments that customer receives from the sales made. Lock-box system is used by many companies to receive customer payments. In this system, customer sends the cash receipts to the post office boxes that are maintained by the banks. Process of maintaining cash receipts by mail helps the company to have strict internal control.

The following are the steps one has to follow when receiving the checks made for the payment sent by mail:

Open the incoming mail. Next, send the mail to the treasurer and thus, it is deposited in the bank by the cashier.

When there is a receipt of check, cashier gets a deposit receipt. Then, accounting department records all the journal entries.

Then, company’s controller compares deposited amount in the bank and cash debited from the accounting department. Thus, these both amounts need to be tallied.

To identify: Internal control weakness over cash receipts

Answer 8

Requirement 2:

To determine

Preventive Measures

Answer 9

Requirement 2:

To determine

Preventive Measures

Answer 10

Expert Solution & Answer

Answer 11

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Answer 12

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Answer 13

Ch. 7 - Prob. 1QC Ch. 7 - Prob. 2QC Ch. 7 - Prob. 3QC Ch. 7 - Prob. 4QC Ch. 7 - Prob. 5QC Ch. 7 - Prob. 6QC Ch. 7 - Prob. 7QC Ch. 7 - Prob. 8QC Ch. 7 - Prob. 9QC Ch. 7 - Prob. 10QC

Solution Summary: The author explains the process of maintaining cash receipts by mail helps the company to have strict internal control. The DT shop does not maintain an internal record of sales in the cash register.

Preventive Measures

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Chapter 7 Solutions