Con-Sport Corporation is a regional wholesaler of sporting goods. The systems flowchart in Figure and the following description present Con-Sport’s cash distribution system.

a. The accounts payable department approves payment of all invoices (I) for the purchase of inventory. Invoices are matched with the purchase requisitions (PR), purchase orders (PO), and receiving reports (RR). The accounts payable clerks focus on vendor name and skim the documents when they are combined.

b. When all the documents for an invoice are assembled, a two-copy disbursement voucher (DV) is prepared, and the transaction is recorded in the voucher register (VR). The DV and supporting documents are then filed alphabetically by vendor.

c. A two- copy journal voucher (JV) that summarizes each day’s entries in the VR is prepared daily. The first copy is sent to the general ledger department, and the second copy is filed in the accounts payable department by date. 

d. The vendor file is searched daily for the DVs of invoices that are due to be paid. Both copies of DVs that are due to be paid are sent to the treasury department along with the supporting documents. The cashier prepares a check for each vendor, signs the check, and records it in the check register (CR). Copy 1 of the DV is attached to the check copy and filed in check- number order in the treasury department. Copy 2 and the supporting documents are returned to the accounts payable department and filed alphabetically by vendor. 

e. A two- copy JV that summarizes each day’s checks is prepared. Copy 1 is sent to the general ledger department, and Copy 2 is filed in the treasury department by date. 

f. The cashier receives the monthly bank statement with canceled checks and prepares the bank reconciliation (BR). If an adjustment is required as a consequence of the BR, a two- copy JV is prepared. Copy 1 is sent to the general ledger department. Copy 2 is attached to Copy 1 of the BR and filed by month in the treasury department. Copy 2 of the BR is sent to the internal audit department. 

Required 

Con-Sport’s cash disbursement system has some weaknesses. Review the cash disbursement system, and for each weakness in the system, 

a. identify where the weakness exists by using the reference number that appears to the left of each symbol. 

b. describes the nature of the weakness. 

c. Make a recommendation on how to correct the weakness. Use a three- column format in preparing your answer:

Transcribed Image Text:

Reference Number Nature of Weakness Recommendation to Correct Weakness