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, 2019, Bill Soong, manager of one of the stores, resigned. Bill's store had doubled its expected December 2018 sales, producing a NEL bonus for Bill of \(\$ 8,000\) in December alone. Charles Brook, an assistant manager at another store, was assigned as manager of Bill's store. Upon examination of the store's accounting records, Charles reported that the store's records indicated sales returns and allowances of \(\$ 110,000\) in the first four days of January 2019, an amount equal to about half of December 2018 sales.

\section*{Required:}

1. CONCEPTUAL CONNECTION Explain what the large amount of sales returns and allowances suggests that Bill might have done.

2. CONCEPTUAL CONNECTION Determine how Yancy could protect itself from a manager who behaved as Bill did.

\section*{OBJECTIVE}

\section*{Problem