CCC7 CONTINUING COOKIE CHRONICLE
Part 1
The weaknesses in internal accounting controls in the system recommended by
John are:
(2) John could potentially steal from the company and then cover the
(3) The accounting information for the business could be lost or stolen if
it is all stored on John’s laptop.
(4) John should not be able to write checks to himself as this leaves the
company vulnerable to theft.
Improvements should include the following:
(2) John should be responsible for the accounting function only. Natalie
(or some other independent person) should sign all checks and make
(3) Bank reconciliations should be prepared by a person independent
of the handling and recording of cash. However, this may not be
(4) The accounting records should be maintained on site and regular
back–ups should be prepared. It would be best if John used a com–
(5) John should submit a monthly invoice for the work he has done to
Natalie for her approval. Natalie should then write and sign the check.
CONTINUING COOKIE CHRONICLE (Continued)
Part 2
(a) COOKIE CREATIONS INC.
Bank Reconciliation
June 30, 2018
Cash balance per bank statement ……………………….
$3,359
Add: Deposit in transit ……………………………………..
$110
Bank error Check No. 603 ($452 – $425) …..
27
137
Less: Outstanding checks ($238 + $297) …………….
535
Adjusted cash balance per bank …………………………
Cash balance per books …………………………………….
Less: Service charge …………………………………………
Error in deposit June 20th ($155 – $125) ……
30
85
NSF check ($100 + $35 service charge) …….
263
Adjusted cash balance per books ……………………….
(b)
June 30
13
13
30
30
85
85