Pacific Company is a rapidly growing start-up business. Its recordkeeper, who was hired one year ago, left town after the company’s manager discovered that a large sum of money had disappeared over the past six months. An audit disclosed that the recordkeeper had written and signed several checks made payable to her fiancé and then recorded the checks as salaries expense. The fiancé, who cashed the checks but never worked for the company, left town with the recordkeeper. As a result, the company incurred an uninsured loss of $184,000. Evaluate Pacific’s internal control system and indicate which principles of internal control appear to have been ignored.
Answer to relevant QuestionsSome of Chapman Company’s cash receipts from customers are received by the company with the regular mail. Chapman’s record keeper opens these letters and deposits the cash received each day. (a) Identify any internal ...Walsh Company deposits all cash receipts on the day when they are received and it makes all cash payments by check. At the close of business on May 31, 2011, its Cash account shows a $7,750 debit balance. Walsh’s May 31 ...Music City Center had the following petty cash transactions in March of the current year. March 5 Wrote a $300 check, cashed it, and gave the proceeds and the petty cashbox to Abby Rode, the petty cashier. 6 Paid $16.75 COD ...Refer to the balance sheet of RadioShack in Appendix A. Does it use the direct write-off method or allowance method in accounting for its Accounts and Note Receivable? What is the realizable value of its receivable’s ...Hue Company uses the perpetual inventory system and allows customers to use two credit cards in charging purchases. With the Omni Bank Card, Hue receives an immediate credit to its account when it deposits sales receipts. ...
Post your question