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Chapter 7: Q2TI (page 387)

Fill in the missing information concerning how companies control cash received by mail.

a. The ________ opens the mail and sends customer checks to the treasurer.

b. The ________ deposits the customer checks in the bank.

c. The ________ uses the remittance advices to record the journal entries for cash receipts.

d. The ________ compares the bank deposit to the journal entry for cash receipts.

Short Answer

Expert verified

The blank space of the first part is filled with mailroom employees.

Step by step solution

01

Definition of the treasurer

A treasurer is a person who manages the financial assets and liabilities of the company.

02

The blank space is filled with

  1. The mailroom employee is the person who opens the mail and sends checks to the treasurer.
  2. The cashier is the person who deposits the customer checks in the bank.
  3. The accounting department uses remittance advice to record the journal entries for cash receipts.

d. The controller compares the bank deposit to the journal entry for cash receipts

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Most popular questions from this chapter

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What are the five components of internal control? Briefly explain each component.

Identifying internal control weakness in cash receipts

Seawind Productions makes all sales on credit. Cash receipts arrive by mail. Justin

Broadway, the mailroom clerk, opens envelopes and separates the checks from

the accompanying remittance advices. Broadway forwards the checks to another

employee, who makes the daily bank deposit but has no access to the accounting

records. Broadway sends the remittance advices, which show cash received, to

the accounting department for entry in the accounts. Broadway鈥檚 only other duty

is to grant sales allowances to customers. (A sales allowancedecreases the customer鈥檚

account receivable.) When Broadway receives a customer check for \(600 less a

\)30 allowance, he records the sales allowance and forwards the document to the

accounting department.

Requirements

1. Identify the internal control weakness in this situation.

2. Who should record sales allowances?

3. What is the amount that should be shown in the ledger for cash receipts?
See all solutions

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