a.Establishment of responsibility

b.Segregation of duties

c.Physical control devices

d.Documentation procedures

e.Independent internal verification

f.Human resource controls

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Cullumber Company expects to have a cash balance of $32,200 on January 1, 2022. These are the relevant monthly budget data for the first two months of 2022.

1.Collections from customers: January $49,700, February $102,200.

2.Payments to suppliers: January $28,000, February $52,500.

3.Wages: January $21,000, February $28,000. Wages are paid in the month they are incurred.

4.Administrative expenses: January $14,700, February $16,800. These costs include depreciation of $700 per month. All other costs are paid as incurred.

5.Selling expenses: January $10,500, February $14,000. These costs are exclusive of depreciation. They are paid as incurred.6.Sales of short-term investments in January are expected to realize $8,400 in cash. Cullumber Company has a line of credit at a local bank that enables it to borrow up to $17,500. The company wants to maintain a minimum monthly cash balance of $14,000.

Prepare a cash budget for January and February. (List items that increase cash balance first.)

Internal Control Principles Possible Errors or Problems 1. An employee steals the cash collected from a customer for an account receivable and conceals this theft by issuing a credit memorandum indicating that the customer returned the merchandise. 2. A small fire destroys 3 days of cash receipts. 3. The official designated to sign checks is able to steal blank checks and issue them without fear of detection, 4. A salesclerk in serving customers often rings up a sale for less than the actual amount and then keeps the additional cash collected from the customer. 5. Three cashiers use one cash register drawer and the cash in the drawer is often short of the balance kept on hand. 6. Each cashier counts his own register drawer each day and verbally reports the results to the supervisor b, d, and e a and b d a and e c, d, and e b 7. Cashiers with over 5-years experience are not bonded. Taythook and Media CULLUMBER COMPANY Cash Budget v January February $ $