Question
Frozen Taste Ice Cream (FTIC) is a manufacturer of ice cream. It purchases its raw material supplies from a number of vendors. The process of
Frozen Taste Ice Cream (FTIC) is a manufacturer of ice cream. It purchases its raw material supplies from a number of vendors. The process of purchasing starts with a Purchase Order sent to the vendor. Once FTIC receives the raw material from the vendor, they prepare a Receiving Report. FTIC receives an Invoice from each vendor for each of the purchases. Once an Invoice is received, a Voucher Packet is prepared that includes the related Purchase Order, Receiving Report, and Invoice, and the Voucher Packet is sent for approval for payment. Once the payment is approved, the Voucher Packet is registered in the Voucher Register and a Check is sent to the Vendor for the approved amount. The payment is then recorded in the Cash Disbursement Journal. FTIC receives a Bank Statement from North Bank, where FTIC has an account, at the end of every month. The flowchart in the following shows the cash disbursement process at FTIC.
You are provided with a series of transactions recorded in the Voucher Register and the Cash Disbursement Journal. In addition, the related Bank Transactions are provided in a partial Bank Statement from North Bank.
Requirements:
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Vouch each item from the Cash Disbursement Journal to the Voucher Register and identify any violation of the management assertion of Occurrence. Use the Bank Statement to perform additional verification of your audit test. [Hint: Any transaction recorded in the journal that did not take place is a violation of Occurrence.]
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Trace each item from the Voucher Register to the Cash Disbursement and identify any violation of the management assertion of Completeness. Use the Bank Statement to perform additional verification of your audit test. [Hint: Any transaction that took place but was not recorded in the journal is a violation of Completeness.]
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As you are Vouching and Tracing, keep an eye for accuracy and identify any violation of the management assertion of Accuracy. [Hint: Any amount that was recorded incorrectly is a violation of Accuracy.]
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Document your errors in the Error Documentation Worksheet provided. [Hint: Follow the three examples provided in the Worksheet.]
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Once you are done with the process, go to Black Board and answer a set of True/False questions related to your findings. [Hint: Use your error documentation worksheet to answer the questions.]
Rules of Engagement:
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You can use your notes, slides, textbook, and the internet.
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You cannot discuss the project with other students or anyone other than your course instructor.
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You can ask the instructor questions to get clarifications on the assignment requirements, but not
to verify your findings.
Cash Disbursement Flow Chart Frozen Taste
Ice Cream
Invoice
Purchase Order
Receiving Report
Voucher Packet
Voucher Register |
Payment Approval
Check
Cash Disbursement Journal |
Frozen Taste Ice Cream Company Voucher Register
Date | Voucher Packet Number | Purchase Order Number | Purchase Order Amount | Receiving Report Number | Receiving Report Amount | Invoice Number | Invoice Amount | Vendor Name | Amount of Payment Approved |
7Feb | 1231 | 701 | $9,231 | 345 | $9,231 | 9003 | $9,231 | Fresh Dairy | $9,231 |
7Feb | 1232 | 702 | $3,459 | 346 | $3,459 | 7007 | $3,459 | True Flavors | $3,459 |
7Feb | 1233 | 703 | $5,837 | 347 | $5,837 | 7009 | $5,837 | True Flavors | $5,837 |
7Feb | 1234 | 704 | $3,658 | 348 | $3,658 | 6501 | $3,658 | Fine Sugar | $3,658 |
7Feb | 1236 | 706 | $9,782 | 350 | $9,782 | 7034 | $9,782 | True Flavors | $9,782 |
8Feb | 1237 | 707 | $7,868 | 351 | $7,868 | 9015 | $7,868 | Fresh Dairy | $7,868 |
8Feb | 1238 | 708 | $5,487 | 352 | $5,487 | 10045 | $5,487 | Tree Nuts | $5,487 |
8Feb | 1239 | 709 | $9,724 | 353 | $9,724 | 6634 | $9,724 | Fine Sugar | $9,724 |
8Feb | 1241 | 711 | $2,324 | 355 | $2,324 | 7058 | $2,324 | True Flavors | $2,324 |
9Feb | 1242 | 712 | $9,758 | 356 | $9,758 | 6699 | $9,758 | Fine Sugar | $9,758 |
9Feb | 1243 | 713 | $5,765 | 357 | $5,765 | 9023 | $5,765 | Fresh Dairy | $5,765 |
9Feb | 1244 | 714 | $4,508 | 358 | $4,508 | 7015 | $4,508 | Fine Sugar | $4,508 |
9Feb | 1245 | 715 | $7,527 | 359 | $7,527 | 2656 | $7,527 | Pure Honey | $7,527 |
Frozen Taste Ice Cream Company Cash Disbursement Journal
Date | Check No. | Payee | GL Account | Voucher Packet Number | Amount |
8Feb | 1001 | Fresh Dairy | Milk Inventory | 1231 | $9,231 |
8Feb | 1002 | True Flavors | Ice Cream Flavor | 1232 | $3,559 |
8Feb | 1003 | True Flavors | Ice Cream Flavor | 1233 | $5,837 |
8Feb | 1004 | Fine Sugar | Other Ingredient | 1234 | $3,658 |
8Feb | 1005 | Pure Honey | Other Ingredient | 1235 | $5,084 |
9Feb | 1006 | True Flavors | Ice Cream Flavor | 1236 | $9,782 |
9Feb | 1008 | Tree Nuts | Gourmet Item | 1238 | $5,487 |
9Feb | 1009 | Fine Sugar | Other Ingredient | 1239 | $9,724 |
10Feb | 1010 | Tree Nuts | Gourmet Item | 1240 | $4,553 |
10Feb | 1011 | True Flavors | Ice Cream Flavor | 1241 | $2,324 |
10Feb | 1013 | Fresh Dairy | Milk Inventory | 1243 | $5,765 |
10Feb | 1014 | Fine Sugar | Other Ingredient | 1244 | $5,508 |
10Feb | 1015 | Pure Honey | Other Ingredient | 1245 | $7,527 |
North Bank | ||
February Statement | ||
Frozen Taste Ice Cream Company | ||
Account Number 0004877857957 | ||
Debits to Account | ||
Check No. | Date | Amount |
1001 | 9Feb | $9,231 |
1002 | 9Feb | $3,459 |
1006 | 9Feb | $9,782 |
1003 | 10Feb | $5,837 |
1004 | 10Feb | $3,658 |
1010 | 10Feb | $4,553 |
1005 | 11Feb | $5,084 |
1008 | 11Feb | $5,487 |
1011 | 11Feb | $2,324 |
1009 | 12Feb | $9,724 |
1013 | 14Feb | $5,765 |
1014 | 16Feb | $4,508 |
1015 | 17Feb | $7,527 |
Error Documentation Worksheet | |
Error | Management Assertion Violated |
Voucher Packet XXXX Paid but no PO, RR, or Invoice Found | Occurrence |
Check Number XXXX for Voucher Packet Number XXXX approved and paid for $X,XXX but recorded in the cash disbursement journal for $Y,YYY | Accuracy |
Payment Approved for Voucher Packet XXXX but no cash disbursement recorded. No record of payment in the bank statement | |
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