Radiant Hair Care makes all sales on credit. Cash receipts arrive by mail, usually within 30 days

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Radiant Hair Care makes all sales on credit. Cash receipts arrive by mail, usually within 30 days of the sale. Ella Neil opens envelopes and separates the checks from the accompanying remittance advices. Neil forwards the checks to another employee, who makes the daily bank deposit but has no access to the accounting records. Neil sends the remittance advices, which show the amount of cash received, to the accounting department for entry in the accounts receivable. Neil’s only other duty is to grant allowances to customers. (An allowance decreases the amount that the customer must pay.) When Neil receives a customer check for less than the full amount of the invoice, she records the allowance in the accounting records and forwards the document to the accounting department.
Requirement
You are a new employee of Radiant Hair Care. Write a memo to the company president identifying the internal control weakness in this situation. State how to correct the weakness.

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Financial accounting

ISBN: 978-0132751124

9th edition

Authors: Walter T. Harrison Jr., Charles T. Horngren, C. William Thom

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