Posted: April 24th, 2016

What suggestions would you make to improve internal control?

2. A friend says to you: “I don’t know why companies bother to prepare bank reconciliations it seems a was
time. Why don’t they just do like I do and adjust the Cash account for any difference between what the bank
shows as a balance and what shows up in the books?” Explain to your friend why a bank reconciliation sho
be prepared as soon as a bank statement is received.

alculation in C cells

n for Calico Corners on May 31, 2012:

late on May 31.
nd the company records indicated that

ds held by Calico Corners. The May

uring May was $54.60. Miscellaneous

nk statement.
ny’s books revealed that a customer’s
ver added to the company’s account.
an account at the same bank.
ealed that another customer’s check in

sly increased the Cash account
reconciliations it seems a waste of
ference between what the bank
why a bank reconciliation should

At Morris Mart Inc., all sales are on account. Mary Morris-Manning is responsible for
mailing invoices to customers, recording the amount billed, opening mail, and recording the
payment. Mary is very devoted to the family business and never takes off more than one or
two days for a long weekend. The customers know Mary and sometimes send personal
notes with their payments. Another clerk handles all aspects of accounts payable. Mary’s

1. List some problems with the current accounts receivable system.


2. What suggestions would you make to improve internal control?


3. How would you explain to Mary that she personally is not the problem?


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