Breezy Company of Bethlehem, Pennsylvania, is a small wholesale distributor of heating and cooling fans. The company deals with retailing firms that buy small to medium quantities of fans. The president, Chuck Breezy, was very pleased with the marked increase in sales over the past couple of years. Recently, however, the accountant informed Chuck that although net income has increased, the percentage of uncollectable has tripled. Because of the small size of the business, Chuck fears he may not be able to sustain these increased losses in the future. He asked his accountant to analyze the situation.

Required
Analyze the weaknesses in internal control and suggestimprovements.

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EXHIBITA BREEZY COMPANY COMPARATIVE INCOME STATEMENT FOR YEARS 2005, 2006, 2007 2005 2006 2007 Revenues: Net sales Other revenue 350,000 500,000 $600,000 62,000 662,000 60,000 60,000 Total revenue Expenses: Cost of goods sold Bad debt expense Salarñes expense Selling expense Advertising expense Other expenses 410,000 560,000 140,000 7,000 200,000 5,000 200,000 20,000 210,000 15,000 240,000 36,000 225,000 20,000 10,000 35,000 566,000 20,000 372,000 30,000 Total expenses 475000 Net income S 38,000 S 85,000 S 96,000