Tiger Pty Ltd is a small and profitable business. They are small in employees but are rapidly
Question:
Tiger Pty Ltd is a small and profitable business. They are small in employees but are rapidly growing. Maurice the owner employs, a sales person, Alanah to take care of sales. She makes the sales, dispatches the goods and invoices the customer. Kelvin is employed to do the purchasing, he does the ordering, receiving and paying for the goods. Customers and suppliers often deal with cash, so Maurice set up a cash box at reception that Alanah and Kelvin can use. The responsibility for the cash is the receptionist’s, Clara. If Clara is not at reception both Kelvin and Alanah know where the key is kept, so they help themselves and tell Clara later about the deposit or withdrawal. As the three are good workmates no paper work changes hands between the employees, it is all verbal communication.
Maurice completes the bank reconciliation, but he is away sick this week and you have been called on to complete the banking for the month end.
Banking records
The bank balance as per the bank statement on the 31st March 2021 was credit $15,204. The balance in the ledger bank account was debit $12,946.
A comparison to the ledger account and the bank statement revealed the following facts:
1. The statement included a debit entry of $75 for account keeping fees
2. On the 28th March Tiger Time Again Pty Ltd issued a cheque number 1111 for $1,355 to Wes Coast on account. The cheque was cleared by the bank in September and was incorrectly journalised by Tiger time Again Pty Ltd for $3,155.
3. A $900 note receivable was collected by the bank for Tiger Tiger Tiger Pty Ltd plus $90 interest. The bank charged a collection fee of $20. No interest has been accrued on the note
4. Unpresented cheques at 31st March totalled $2,019 and outstanding deposits were $2,456
INTERNAL CONTROLS
Advise Maurice as to internal controls that are weak and possible remedies. Not all principles may be present.
Create a 4 x 5 table for the cash at bank ledger account and a 2 x 4 for the bank reconciliation.
The internal controls can be written underneath.
Expert Answer:
Answer A The internal controls that are weak are 1 There is no separation of duties between employees handling cash This could lead to theft or fraud ... View the full answer
