MyLab Accounting with Pearson eText -- Access Card -- for Horngren's Accounting, The Financial Chapters (My Accounting Lab)
11th Edition
ISBN: 9780133877502
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Textbook Question
thumb_up100%
Chapter 9, Problem E9.15E
E9-15 Identifying and correcting internal control weakness
| Learning Objective 1 |
Suppose The Right Rig Dealership is opening a regional office in Omaha. Cary Regal, the office manager, is designing the internal
• 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
• 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.
Expert Solution & Answer
Learn your wayIncludes step-by-step video
schedule03:00
Students have asked these similar questions
of
E9-15 Identifying and correcting internal control weakness
Suppose The Right Rig Dealership is opening a regional office n 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:
ective 1
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…
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 following 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.…
> Exercises
E8-12 Understanding the Sarbanes-Oxley Act and identifying internal c
strengths and weaknesses
The following situations suggest a strength or a weakness in internal control.
a. Top managers delegate all internal control procedures to the accounting
department.
E8-14
Learning Objective 1
b. Accounting department staff (or the bookkeeper) orders merchandise and
approves invoices for payment.
c. Cash received over the counter is controlled by the sales clerk, who rings up th
sale and places the cash in the register. The sales clerk matches the total recorded
by the register to each day's cash sales.
d. The employee who signs checks need not examine the payment packet because be
is confident the amounts are correct.
ES
Requirements
1. Define internal control.
2. The system of internal control must be tested by external auditors. What law or
rule requires this testing?
3. Identify each item in the list above as either a strength or a weakness in internal
control, and give your…
Chapter 9 Solutions
MyLab Accounting with Pearson eText -- Access Card -- for Horngren's Accounting, The Financial Chapters (My Accounting Lab)
Ch. 9 - 1. With good internal controls, the person who...Ch. 9 - Prob. 2QCCh. 9 - Which of the following is a limitation of the...Ch. 9 - 3. The entry to record a write-off of an...Ch. 9 - Brickman Company uses the allowance method to...Ch. 9 - Brickman’s ending balance of accounts Receivable...Ch. 9 - At December 31 year-end, Crain Company has an...Ch. 9 - Using the data in the preceding question, what...Ch. 9 - At year-end, Schultz Company has cash of $11,600,...Ch. 9 - Using the data in the preceding question, assume...
Ch. 9 - What is the difference between accounts receivable...Ch. 9 - List some common examples of other receivables,...Ch. 9 - Prob. 3RQCh. 9 - When dealing with receivables, give an example of...Ch. 9 - What type of account must the sum of all...Ch. 9 - Prob. 6RQCh. 9 - What occurs when a business factors its...Ch. 9 - What occurs when a business pledges its...Ch. 9 - What is the expense account associated with the...Ch. 9 - When is bad debts expense recorded when using the...Ch. 9 - What are some limitations of using the direct...Ch. 9 - Prob. 12RQCh. 9 - Prob. 13RQCh. 9 - When using the allowance method, what account is...Ch. 9 - Prob. 15RQCh. 9 - Prob. 16RQCh. 9 - How do the percent-of-receivables and...Ch. 9 - What is the difference between the...Ch. 9 - In accounting for bad debts, how do the income...Ch. 9 - What is the formula to compute interest on a note...Ch. 9 - Prob. 21RQCh. 9 - Prob. 22RQCh. 9 - Prob. 23RQCh. 9 - Prob. 24RQCh. 9 - Prob. S9.1SECh. 9 - Prob. S9.2SECh. 9 - Applying the direct write-off method to account...Ch. 9 - Collecting a receivable previously written...Ch. 9 - Applying die allowance method to account for...Ch. 9 - Applying the allowance method (percent-of-sales)...Ch. 9 - Applying the allowance method...Ch. 9 - Applying the allowance method...Ch. 9 - Computing interest amounts on notes receivable A...Ch. 9 - Accounting for a note receivable On June 6,...Ch. 9 - Accruing interest revenue and recording collection...Ch. 9 - Recording a dishonored note receivable Midway...Ch. 9 - Using the acid-test ratio, accounts receivable...Ch. 9 - Defining common receivables terms Learning...Ch. 9 - E9-15 Identifying and correcting internal control...Ch. 9 - Journalizing transactions using the direct...Ch. 9 - Prob. E9.17ECh. 9 - Prob. E9.18ECh. 9 - Accounting for uncollectible accounts using the...Ch. 9 - Prob. E9.20ECh. 9 - Prob. E9.21ECh. 9 - Journalizing note receivable transactions...Ch. 9 - Journalizing note receivable transactions The...Ch. 9 - Journalizing note receivable transactions Like New...Ch. 9 - Evaluating ratio data Chippewa Carpets reported...Ch. 9 - Prob. E9.26ECh. 9 - Accounting for uncollectible accounts using the...Ch. 9 - Accounting for uncollectible accounts using the...Ch. 9 - Accounting for uncollectible accounts using the...Ch. 9 - Prob. P9.30APGACh. 9 - Accounting for notes receivable and accruing...Ch. 9 - Accounting for notes receivable, dishonored notes,...Ch. 9 - Prob. P9.33APGACh. 9 - Prob. P9.34BPGBCh. 9 - Prob. P9.35BPGBCh. 9 - Prob. P9.36BPGBCh. 9 - Prob. P9.37BPGBCh. 9 - Prob. P9.38BPGBCh. 9 - Prob. P9.39BPGBCh. 9 - Prob. P9.40BPGBCh. 9 - Prob. P9.41CPCh. 9 - Accounting for uncollectible accounts using the...Ch. 9 - Decision Case 9-1 Weddings on Demand sells on...Ch. 9 - Decision Case 9-2 Pauline’s Pottery has always...Ch. 9 - Prob. 9.1FCCh. 9 - > Financial Statement Case 9-1 Use Starbucks...
Additional Business Textbook Solutions
Find more solutions based on key concepts
Calculate retained earnings balance. (LO 5). Suppose Hillard Company started the year with a balance of $450,00...
Financial Accounting
Management accounting should not fit the straitjacket of financial accounting. Explain and give an example.
Cost Accounting (15th Edition)
3. Which method almost always produces the most depreciation in the first year?
a. Units-of-production
b. Strai...
Horngren's Financial & Managerial Accounting, The Financial Chapters (6th Edition)
(Record inventory transactions in the periodic system) Wexton Technologies began the year with inventory of 560...
Financial Accounting (11th Edition)
Discussion Questions 1. What characteristics of the product or manufacturing process would lead a company to us...
Managerial Accounting (5th Edition)
Define intangible assets.
Principles of Accounting Volume 1
Knowledge Booster
Similar questions
- Submit it in excel form E8.3arrow_forwardANNOUNCING A NEW INFORMATION SYSTEM The AJAX Company is considering implementing a new accounting system, which will automate sales processing, cash receipts, accounts payable, and cash disbursement procedures. Roger Moore, AJAXs CIO sent an announcement letter to the AJAX community. In the letter, Moore said: I have contracted with Spartan Consulting Group to do the needs analysis, system selection, and design work. The programming and implementation will be performed in-house using existing IT department staff. The development process will be unobtrusive to user departments because Spartan knows what needs to be done. They will work independently, in the background, and will not disrupt departmental and internal audit work How with time-consuming interviews, surveys, and questionnaires. This promises to be an efficient process that will produce a system that will be appreciated by all users. Required Draft a memo from George Jones, Director of Internal Audits, in response to Moores letter.arrow_forwardInternal Control-Fraud Triangle Identify the fraud triangle risk factor (opportunity-O, pressure-P or rationalization-R) in each situation. 1. 2. 3. Employeees are told to report increased income or be fired. Several sales clerks share the same cash drawer. A worker did not receive a bonus this year and now feels it's okay to use the company credit cared for personal expenses. 4. Doors safeguarding valuable merchandise are not locked with a passcode. An employee feels underpaid and believes stealing inventory is justified. 5.arrow_forward
- ning Objective 1 E8-12 Understanding the Sarbanes-Oxley Act and identifying internal control strengths and weaknesses The following situations suggest a strength or a weakness in internal control. a. Top managers delegate all internal control procedures to the accounting department. b. Accounting department staff (or the bookkeeper) orders merchandise and approves invoices for payment. c. Cash received over the counter is controlled by the sales clerk, who rings up the sale and places the cash in the register. The sales clerk matches the total recorded by the register to each day's cash sales. d. The employee who signs checks need not examine the payment packet because he is confident the amounts are correct. Requirements 1. Define internal control. 2. The system of internal control must be tested by external auditors. What law or rule requires this testing? 3. Identify each item in the list above as either a strength or a weakness in internal control, and give your reason for each…arrow_forwardAnswer the following questions about the controls in bank accounts: Understanding bank account controls ver the following questions about the controls in bank Learning Objective 6 accounts: Requirements 1. Which bank control protects against forgery? Vlhich bank control reports the activity in the customer's account each period? Which bank control confirms the amount of money put into the bank account?arrow_forwardUsing Excel to Account For Bank Reconciliation Errors PROBLEM The following errors were found when the controller at Mitra Hotel was doing the October 31 bank reconciliation. Student Work Area Required: Provide input into cells shaded in yellow in this template. Input the required mathematical formulas or functions with cell references to the Problem area or work area as indicated. 1. On October 3, Mitra recorded a payment of an account payable at a different amount than the correct amount recorded by the bank. a. For each of these errors, indicate if and how it would be shown on the bank reconciliation, ▼ 2. 3. Recorded by Mitra $ Correct amount recorded by bank 360 630 On October 16, Mitra recorded a deposit for the collection of an account receivable at a different amount than the correct amount recorded by the bank. Recorded by Mitra 1. Payment of account payable Decrease to book cash balance 2. Collection of account receivable Increase to book cash balance 3. Collection of account…arrow_forward
- 5 Identify which control activity is violated in each of the following situations, and explain how the situation creates an opportunity for fraud or inappropriate accounting practices. Once a month, the sales department sends sales invoices to the accounting department to be recorded. Several clerks at Harper's Groceries use the same cash register drawer. Steve orders merchandise for Baker Company; he also receives merchandise and authorizes payment for merchandise.arrow_forwardDetermine whether each cash payment procedure is an internal control strength or weakness. 1. A voucher system is used for all payments of liabilities. 2. The owner of a small business has authority to write and sign checks. 3. When the owner is out of town, the recordkeeper is in charge of signing checks. 4. To save time, all departments are allowed to incur liabilities. 5. Payments over $100 are made by check. 6. Requesting and receiving merchandise are handled by the same department.arrow_forwardThe flowchart labeled Problem 14 depicts the responsibilities of an accounting clerk in a small company. Required Identify any control problems in the system. What sorts of fraud are possible in this system?arrow_forward
- Which of the following is an external threat to revenue security? (select all that apply) 303 Walk-outs or skipping on the check Unsigned credit cards Quick-change artists Bondingarrow_forwardCase Study A Scenario A major retailer asked the IS auditor to review their readiness for complying with credit card company requirements for protecting cardholder information. The IS auditor subsequently learned the following information. The retailer uses wireless point-of-sale registers that connect to application servers located at each store. These registers use wired equivalent protection (WEP) encryption. The application server, usually located in the middle of the store’s customer service area, forwards all sales data over a frame relay network to database servers located at the retailer’s corporate headquarters, and using strong encryption over an Internet virtual private network (VPN) to the credit card processor for approval of the sale. Corporate databases are located on a protected screened subset of the corporate local area network. Additionally, weekly aggregate sales data by product line is copied from the corporate databases to magnetic media and mailed to a…arrow_forwardIdentifying internal control weakness in cash receipts Pendley Productions makes all sales on credit. Cash receipts arrive by mail. Larry Chipcllo, the mailroom clerk, opens envelopes and separates the checks from the accompanying remittance advice. Chipello forwards the checks to another employee, who makes the daily bank deposit but has no access to the accounting records. Chipello sends the remittance advice, which shows cash received, to the accounting department for entry in the accounts. Chipello’s only other duty is to grant sales allowances to customers. (A sales allowance decreases the customer’s account receivable.) When Chipello receives a customer check for $575 less than a $45 allowance, he records the sales allowance and forwards the document to the accounting department. Requirements Identify the internal control weakness in this situation. Who should record sales allowances? What is the amount that should be shown in the ledger for cash receipts?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Pkg Acc Infor Systems MS VISIO CDFinanceISBN:9781133935940Author:Ulric J. GelinasPublisher:CENGAGE L
Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
Century 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:Cengage
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Pkg Acc Infor Systems MS VISIO CD
Finance
ISBN:9781133935940
Author:Ulric J. Gelinas
Publisher:CENGAGE L
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
Auditing: A Risk Based-Approach (MindTap Course L...
Accounting
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Cengage Learning
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:9781337679503
Author:Gilbertson
Publisher:Cengage
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,