Evaluating Internal Control Cripple Creek Company has one trusted employee who, as the owner said, handles all
Question:
a. Cash sales sometimes were not entered in the cash register, and the trusted employee pocketed approximately $50 per month.
b. Cash taken from the cash register (and pocketed by the trusted employee) was replaced with expense memos with fictitious signatures (approximately $12 per day).
c. A $300 collection on an account receivable of a valued out-of-town customer was pocketed by the trusted employee and was covered by making a $300 entry as a debit to Sales Returns and a credit to Accounts Receivable.
d. An $800 collection on an account receivable from a local customer was pocketed by the trusted employee and was covered by making an $800 entry as a debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable.
Required:
1. What was the approximate amount stolen during the past year?
2. What would be your recommendations to the owner?
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