Question

Save Homework: Chapter 7 Homework Problems Score: 0 of 6 pts 1 of 3 (0 complete) P7-23A (similar to) HW Score: 0%, 0 of 20 p! Question Help Rocking Chair Productions makes all sales on credit. Cash receipts arrive by mail. Mike Speiler, the mallroom clerk, opens envelopes and separates the checks from the accompanying remittance advices. Speller forwards the checks to another employee, who makes the daily bank deposit but has no access to the accounting records. Speller sends the remittance advices, which show cash received, to the accounting department for entry in the accounts. Speler's only other duty is to grant sales allowances to customers. (A sales allowance decreases the customer's account receivable.) When Speiler receives a customer check for $500 less a $75 allowance, he records the sales allowance and forwards the document to the accounting department Read the requirements Requirement 1. Identify the internal control weakness in this situation.

Answer 1

Requirement 1

The job of receiving customers payments is performed by the same person who is responsible for accounting for sales allowances.

Requirement 2

The sales allowances should be recorded by a person who does not have access to the cash receipts.

Requirement 3

The amount that should be shown in the ledger for cash receipts is $500 - $75 = $425