1. dentify internal control strengths and weaknesses and suggest improvements. (LO 1) C

The following situations suggest either a strength or a weakness in internal control.

• 1.At Frederico's, Amanda and Long work alternate lunch hours. Normally Amanda works the cash register at the checkout counter, but during her lunch hour Long takes her place. They both use the same cash drawer and count cash together at the end of the day.
• 2.Sandeep is a very hard-working employee at Stan's Hardware. Sandeep does such a good job that he is responsible for most of the company's office and accounting tasks. The only thing the owner has to do is sign cheques.
• 3.At Half Pipe Skate, they are very concerned about running an efficient, low-cost business. Consequently, the manager has assigned the same individual to do the purchasing and prepare the receiving reports when the merchandise is delivered.
• 4.At Traction Tires, most of the tires are stored in a fenced outdoor storage area. One of the employees noticed a place where the fence needed to be repaired and reported this to the manager. The fence was fixed before the close of business that night.
• 5.The internal auditors at Humber Manufacturing regularly report their findings to senior management, who get the accounting department to investigate and resolve any problems.
• 6.All employees at Vincent Travel take a vacation every year. During that time, with the exception of the controller's position, the employees' duties are assigned to another individual while they are on vacation.

Instructions

(a) State whether each situation above is a strength or a weakness in internal control.

(b) For each weakness, suggest an improvement.

2.

Prepare entries for debit and credit card sales. (LO 2) AP

Presented below are three independent situations.

• 1.On March 15, 40 customers used debit cards to purchase merchandise for a total of $8,740 from Hockey Town. Hockey Town pays a $1.35 debit card fee for each transaction.
• 2.On June 21, Circle Creations Gallery sells a painting to Constance Furrow for $1,960. Constance uses her Visa bank credit card to pay for the purchase. The bank charges Circle Creations a 4.0% fee for all credit card transactions. On July 17, Constance receives her Visa bill and pays for this purchase. Round to the nearest dollar.
• 3.On October 7, A. Ramos uses his store credit card to purchase merchandise from The Bay for $550. On November 10, Ramos receives his credit card bill from The Bay and pays for this purchase.

Instructions

(a) Prepare Hockey Town's journal entries for the transactions in part (1).

(b) Prepare Circle Creations' journal entries for the transactions in part (2).

(c) Prepare The Bay's journal entries for the transactions in part (3).