1/ The Southern Lumber company operates a wholesale lumber store local construction contractors (the customers). The company has the following procedures relating to their business:

The store is open every day from 9:00 until 6:00. Customers are met by sales clerks who recommend products to satisfy customer's needs. After the customers decides on a purchase, the sales clerk goes into warehouse to find the product and set it aside for shipment or pick up the customer.

Sales clerks prepare written sales invoices in triplicate. The original and second copy are given to the cashier. The third copy is retained by the sales clerk in the sales book. For cash sales, the customer pays the sales clerk, who presents the money to the cashier with the invoice copies. For credit sale, the invoice is compared by the cashier to a pre-approved prepared credit list. At the end of each day, the cashier lists the sales and cash received and forwards the cash and the second copy of all sales invoices to the accounts receivable (A/R) clerk.

The A/R clerk balances the cash received with cash sales invoices and prepares a daily summary. The sales invoices are sent to the inventory control clerk in the accounting department for posting to the perpetual inventory control cards. After posting, the inventory control clear files files all invoices numerically. The A/R clerk posts the daily sales summary to the cash receipts journal and sales journal and files the sales summaries by date. The A/R clerk also posts the credit sales to the accounts receivable subsidiary ledger account.

The cash sales and cash received on account make up the daily bank deposit.

The mail is opened each morning by a mail clerk in the sales department. The mail clerk prepares a remittance advice showing customer and amount paid if one is not received. The clerks and remittance advices are then forwarded to the sales department supervisor who reviews each check and forwards the checks and remittance advice to the accounting department supervisor.

The accounting department supervisor, who also functions as credit manager preparing the list and determining all credit limits, reviews all checks for payments on past due accounts and then forwards the checks and remittance advices to the A/R clerk, who arranges the advices in alphabetical order. The remittance advices are posted directly on the A/R clerk. The remittance advices are filed chronologically.

After receiving the cash from the previous day's cash sales, the A/R clear prepares the daily deposit slip in triplicate. The third copy of the deposit slip and returns the second copy to the accounting department where it is filed by date by the A/R clerk. Monthly bank statements are reconciled promptly by the accounting department supervisor and filed by date.

Required: Identify five internal control weaknesses apparent in this scenario and five controls to correct the weaknesses.

2/ Baker Manufacturing company has the recently implemented a new general and reporting systems. The systems allow the various accounting subsystems to enter and update the general ledger. All department all allowed to enter adjusting entries and chart of account changes. There are specific steps that must be followed in order to enter transaction and adjusting entry information. Specially, in the transaction entry input screen, the user is required to input the first letter of their first name and their last name. The user then enters the journal entries and adjustment entries. Baker Manufacturing company is striving to be a "paper-free" company. Therefore, no paper documents are required to support the entries. During the recent month, the following errors and concerns were identified:

a/ a number of journal entries were not approved by department managers prior to being entered into the system.

b/ a vendor accessed the reporting system and copied the financial statement of Baker.

c/ the computation of the depreciation adjusting entry was wrong- the formula used on the spreadsheet was missing a decimal.

d/ a number of managers reviewing the reports generated by the system complained the format of statements made it difficult to read but they agreed the amounts were accurate and a

e/ the journal entries entered by the revenue subsystem were deleted by the employee entering the payroll entries-the accounts were updated but there is no record of the revenue entries.

Required: Identify five control procedures that the Baker Manufacturing company should implement to address the problems.