The following control procedures are used at Melora Company for over-the-counter cash receipts. To minimize the...

The following control procedures are used at Melora Company for over-the-counter cash receipts.
1. To minimize the risk of robbery, cash in excess of $100 is stored in an unlocked briefcase in the stock room until it is deposited in the bank.
2. All over-the-counter receipts are registered by three clerks who use a cash register with a single cash drawer.
3. The company accountant makes the bank deposit and records the day’s receipts.
4. At the end of each day, the total receipts are counted by the cashier on duty and reconciled to the cash register total by the cashier.
5. Cashiers are experienced; they are not bonded.

INSTRUCTIONS:

For each procedure, explain the weakness in internal control, and identify the control principle that is violated.
For each weakness, suggest a change in procedure that will result in good internal control.

The following information pertains to Miner Video Company.
1. Cash balance per bank, July 31, $7,263
2. July bank service charge not recorded by Miner Video - $28
3. Cash balance per books, July 31, $7,284
4. Deposits in transit, July 31, $1,500.
5. Bank collected $900 note for Miner in July, plus interest $36, less fee $20. The collection has not been recorded by Miner, and no interest has been accrued.
6. Outstanding checks, July 31, $591.

INSTRUCTIONS:

Prepare a bank reconciliation at July 31.
Journalize the adjusting entries at July 31 on the books of Miner Video Company.

Expert Solution

ekkarill92 answered 1 year ago

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