Each of the following lettered paragraphs briefly describes an independent situation involving some aspect of internal control.

Required 

Answer the questions at the end of each paragraph or numbered section.

a. Robert Flynn is the office manager of Oakwood Company, a small wholesaling company. Flynn opens all incoming mail, makes bank deposits, and maintains both the general ledger and the accounts receivable subsidiary ledger. An assistant records transactions in the credit sales journal and the cash receipts journal. The assistant also prepares a monthly statement for each customer and mails the statements to the customers. These statements list the beginning balance, credit sales, cash receipts, adjustments, and ending balance for the month.

1. If Flynn stole Customer A's \(\$ 200\) check (payment in full) and made no effort to conceal his embezzlement in the ledgers, how would the misappropriation be discovered?

2. What routine accounting procedure would disclose Flynn's \(\$ 200\) embezzlement in part (1), even if Flynn destroyed Customer A's subsidiary ledger account?

3. What circumstances might disclose Flynn's theft if he posted a payment to Customer A's account in the accounts receivable subsidiary ledger and set up a \(\$ 200\) account for a fictitious customer?

4. In part (3), why might Flynn be anxious to open the mail himself each morning?

5. In part (3), why might Flynn want to have the authority to write off accounts considered uncollectible?

b. A bagel shop uses a cash register that produces a printed receipt for each sale. The register also prints each transaction on a paper tape that is locked inside the cash register. Only the supervisor has access to the cash-register tape. A prominently displayed sign promises a free bagel to any customer who is not given a cash-register receipt with his or her purchase. How is this procedure an internal control device for the bagel shop?

c. Jason Philber, a swindler, sent several businesses invoices requesting payment for office supplies that had never been ordered or delivered to the businesses. A 5 percent discount was offered for prompt payment. What internal control procedures should prevent this swindle from being successful?

d. The cashier for Downtown Cafeteria is located at the end of the food line. After customers have selected their food items, the cashier rings up the prices of the food and the customer pays the bill. The customer line frequently stalls while the person paying searches for the correct amount of cash. To speed things up, the cashier often collects money from the next customer or two who have the correct change without ringing up their food on the register. After the first customer finally pays, the cashier rings up the amounts for the customers who have already paid. What is the internal control weakness in this procedure? How might the internal control over the collection of cash from the cafeteria customers be strengthened?