Accounting Chapter 8 Homework Natalie Should Ensure That She Provided With

CC8 COOKIE CREATIONS

Part 1

The weaknesses in internal accounting controls in the system recommended

by John are:

(1) The cash could be stolen from John’s vehicle before it is deposited in the

bank.

(2) John could potentially steal from the company and then cover the theft

because of a lack of segregation of duties between the handling of cash,

Improvements should include the following:

(1) Cash should be deposited in the bank daily. At a minimum cash should be

locked in a safe until it can be deposited.

(2) John should be responsible for the accounting function only. Natalie (or

some other independent person) should sign all checks and make all

deposits. Checks should be signed only when there is documentation

CC8 (Continued)

Part 1 (Continued)

(4) The accounting records should be maintained on site and regular back–

ups should be prepared. It would be best if John used a computer at

Cookie Creations to prepare the accounting information; however, if he is

going to use his laptop, Natalie should ensure that she is provided with a

regular back-up of all the accounting records. This ensures that if John

Part 2

(a) COOKIE CREATIONS

Bank Reconciliation

June 30, 2017

Cash balance per bank statement ………………………… $3,359

Add: Deposit in transit ………………………………………. $110

Bank error Check No. 603 ($452 – $425) ……… 27 137

3,496

Less: Outstanding checks ($238 + $297) ……………… 535

CC8 (Continued)

Part 2 (Continued)

(b) June 30 Miscellaneous Expense ……………………. 13

Cash …………………………………………… 13

30 Service Revenue ……………………………… 30

Cash …………………………………………… 30