Brierra Products, Inc., makes all sales on account. Brittney Sims, accountant for the company, receives and opens incoming mail. Company procedure requires Sims to separate customer checks from the remittance slips, which list the amounts that Sims posts as credits to customer accounts receivable.
Sims deposits the checks in the bank. At the end of each day, she computes the day’s total amount posted to customer accounts and matches this total to the bank deposit slip. This procedure ensures that all receipts are deposited in the bank.
1. As a consultant hired by Brierra Products, Inc., write a memo to management evaluating the company’s internal controls over cash receipts from customers. If the system is effective, identify its strong features. If the system has flaws, propose a way to strengthen the controls.