(Appendixes1) INTERNAL CONTROL FOR SALES. Yancy’s Hardware has three stores. Each store manager is paid a salary plus a bonus on the sales made by his or her store. On January 5, 19x6, Bill Slick, manager of one of the stores, resigned. Bill’s store had doubled its expected December 19x5 sales, producing a bonus for Bill of $8,000 in December alone. Charles Brook, an assistant manager at another store, was promoted to manager of Bill Slick’s store. Upon examination of the store’s accounting records, Charles reports to Yancy that the store’s records indicated sales returns and allowances of $110,000 in the first 4 days of January 19x6, an amount equal to about half of December 19x65 sales. LO31 REQUIRED:

1. What does the large amount of sales returns and allowances suggest that Bill Slick might have done?

2. How could Yancy protect itself from a manager who behaved as Bill Slick did?