All over the counter receipts are entered in cash registers

Brief Exercise 8-2 Shelly Eckert has prepared the following list of statements about internal control. Identify each statement as true or false. 1. One of the objectives of internal control is to safeguard assets from employee theft, robbery, and unauthorized use. 2. One of the objectives of internal control is to enhance the accuracy and reliability of the accounting records. No laws require U.S. corporations to maintain an adequate system of internal control. Brief Exercise 8-5 Rosenquist Company has the following internal control procedures over cash receipts. 3. Identify the internal control principle that is applicable to each procedure. 1. All over-the-counter receipts are entered in cash registers. 2. All cashiers are bonded. 3. Daily cash counts are made by cashier department supervisors. 4. The duties of receiving cash, recording cash, and custody of cash are assigned to different individuals. 5. Only cashiers may operate cash registers. Brief Exercise 8-8 Pennington Company has the following internal control procedures over cash disbursements. Identify the internal control principle that is applicable to each procedure. 1. Company checks are prenumbered. 2. The bank statement is reconciled monthly by an internal auditor. 3. Blank checks are stored in a safe in the treasurer’s office. 4. Only the treasurer or assistant treasurer may sign checks. 5. Check-signers are not allowed to record cash disbursement transactions. Brief Exercise 8-12 (a) Indicate whether following reconciling items will result in an adjustment to the depositor's records. (1) Outstanding checks (2) Bank debit memorandum for service charge (3) Bank credit memorandum for collecting a note for the depositor (4) Deposits in transit Exercise 8-2 The following control procedures are used at Torres Company for over-the-counter cash receipts. For each procedure, explain the weakness in internal control, and identify the control principle that is violated. (b) For each weakness, suggest a change in procedure that will result in good internal control. (a) 1. To minimize the risk of robbery, cash in excess of $100 is stored in an unlocked attaché case in the stock room until it is deposited in the bank. (a) Weakness: Principle: (b) 2. Recommended Change: All over-the-counter receipts are registered by three clerks who use a cash register with a single cash drawer. (a) Weakness: Principle: (b) Recommended Change: 3. The company accountant makes the bank deposit and then records the day’s receipts. (a) Weakness: Principle: (b) 4. Recommended Change: At the end of each day, the total receipts are counted by the cashier on duty and reconciled to the cash register total. (a) Weakness: Principle: (b) Recommended Change: 5. Cashiers are experienced; they are not bonded. (a) Weakness: Principle: Recommended Change: Exercise 8-6 Listed below are five procedures followed by Gilmore Company. (b) 1. Employees are required to take vacations. 2. Any member of the sales department can approve credit sales. 3. Paul Jaggard ships goods to customers, bills customers, and receives payment from customers. Total cash receipts are compared to bank deposits daily by someone who has no other cash 4. responsibilities. 5. Time clocks are used for recording time worked by employees. Indicate whether each procedure is an example of good internal control or of weak internal control. If it is an example of good internal control, indicate which internal control principle is being followed. If it is an example of weak internal control, indicate which internal control principle is violated. Procedure IC Good or Weak? Related internal control principle 1. 2. 3. 4. 5. Exercise 8-8 Horvath Company uses an imprest petty cash system. The fund was established on March 1 with a balance of $100. During March, the following petty cash receipts were found in the petty cash box. Date Receipt No. For 3/5 1 Stamp Inventory 7 2 Freight-Out Amount $39 21 9 3 Miscellaneous Expense 11 4 Travel Expense 14 5 Miscellaneous Expense 6 24 5 The fund was replenished on March 15 when the fund contained $2 in cash. On March 20, the amount in the fund was increased to $175. Journalize the entries in March that pertain to the operation of the petty cash fund. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Mar. 1 Mar. 15 Account Titles and Explanation Debit Credit Mar.