Bosh Rental (Bosh) is a franchise business dealing in rental equipment. Franchisees purchase or lease rental equipment
Question:
Bosh Rental (Bosh) is a franchise business dealing in rental equipment. Franchisees purchase or lease rental equipment from Bosh then rent out items on a day-to-day basis to their customers at rates approved by Bosh.
In a franchisee store, rental revenues can be cash or on credit for approved customers. A rental clerk records the sale (rental) on a sales invoice after verifying the price against the authorized price list, and also keys the rental information into a database listing all of the store’s equipment, so that the store can tell at any time which equipment is on hand. The cash receipts clerk records the cash in a cash receipts journal. The store manager compiles a remittance list, which is used at the end of the day to prepare a bank deposit. When credit sales are made, the store maintains the information in the sub-ledgers. Sales invoices are serially pre-numbered.
For each of the following control objectives, identify the population for sample selection and prepare 4 audit procedures to test the objective: completeness of sales, authorization of sales, completeness of cash receipts, and validity of receivables for a franchisee store.