Question

Cengage Century G В І Ch 8-3 Exercises & Problems Cengaged in the Ramona's Clothing is a retail store specializing in women's clothing. The store has established a liberal return policy for the holiday season in order to encourage gift purchases. Any item purchased during November and December may be returned through January 31, with a receipt, for cash or exchange. If the customer does not have a receipt, cash will still be refunded for any item under $75. If the item is more than $75, a check is mailed to the customer. Whenever an item is returned, a store clerk completes a return slip, which the customer signs. The return slip is placed in a special box. The store manager visits the return counter approximately once every two hours to authorize the return slips.Clerks are instructed to place the returned merchandise on the proper rack on the selling floor as soon as possible. This year, returns at Ramona's Clothing have reached an all-time high. There are a large number of returns under $75 without receipts. a. How can sales clerks employed at Ramona's Clothing use the store's return policy to steal money from the cash register b. What internal control weaknesses do you see in the return policy that make cash thefts easier? c. Would Issuing a store credit in place of a cash refund for all merchandise returned without a receipt reduce the possibility of theft? Classify the following as either advantages or disadvantages of issuing a store credit in place of cash. A clerk could only issue a phony store credit rather than taking money from the cash register. The store would lose less revenue if customers had to choose other store merchandise instead of getting a cash refund. Issuing only a store credit for returns without a receipt is a stricter return policy that may affect gift-givers' purchase decisions Next Check My Work 2 more Check My Work uses remaining, Save and Ext Submit Assignment for Grad Assignment Score: 0.0%
internal controls help plz

Answer 1

1. Sales clerks can use this return policy to steal money. He can put fake slips and earn money thereon. As it is clear that there are many returns at the store, it may include many fake slips.
2. There is no manager to check or verify whether returns are actual or just on paper. There is clerical staff engaged in it and they together with other clerks may involve in the fraud or fake slips.
3. It can but not fully as these can further be used by clerks. For example, a clerk may receive full payment of customer and show the discount in books and record less revenue.

1. Advantage
2. Disadvantage
3. Advantage (as in order to avail that discount, customers will purchase from that shop only)

4. Manager or owner should personally check or verify the return slips whether they are fake or real. There must be a check that goods or items that are returned actually belong to store or not.