Internal Control Cases I. SMIIH'S MARKET (SMALL BUSINESS CASH SALES ACCOUNTING SYSTEM In I989.Robert8mithopeneda Inullfruitandwge- tahh market in Bethlehem. mm. Oliginally. Sntheoldoulypmduoeymonhlefamilyfam and omhard' A: the market's popularity grew. how- ow.headdedbmad.oannedgooda.uhmeata.and a limited supply of Fromm goods. Today Smith's Markotisa lEl-rangofarmon'marketudthaalnmg looal customer base, lmleed. the market's reputation for low prime: and high quality draws customers fmmotheernnsylv-ninoiuandevcnfrmnthe neighboring state of New Jersey. Currently Smith's hadmplw.'lhoaaincludemlosm]abelf molten. tarmlaborere. stun superman, and olerioal stalRoomy,Smithhasnooodado-clincinpmts and aloe. while his purchase: ofproduete for resale hlwoontinuodtorisr.AlIhoushth-=oomn does not prepare audited nandal atatunmte, Robert Smith has commissioned your public accounting mtoamhismmpany'ssalosprocod'ureaand internal controls. Smith'e Market expenditure cycle pruduma an: (headland below. Expenditure Cycle Napondimmlebeginsinlhewarehmadjm tothcmarketwtnremith'skmpait: intentoryof nonparillmblegoodsmdtaamodpodaandpaper produota The company also maintains a one-day immofpmduoeaadotlmpehablepmdnotsm thwamhouseaodhoanqnioktyreetooktholhlm whamtdoeeofhmimeaohmningthe warehousederkrwiwethemarlretshdmi'oriteme thatmadmbempteniahad.mdwkmnmhthe shelves and adjueta the digital stackreooa'ds armor-d- inglyummcwmhousoPCAtthismthcdo! whatnot: ofwmtmeatobereorderod fromtheeup pmandpdnupumorrhnfmmthePGDepmd- ingupunthenatureufthapmduotandmymoyoftl'l mithechrkeitlumaatheputchaseordertothe mphorortimbyphom.Phommdmmfoowod upbylhxingthepurdtaaeordertolltempplier'm drgoodaarrivefrmthovmdor.lcwamhouzderk mien: the puking Ilip, restock: the warehouse Mmmmmmemkmdsommm Atnmdofthodaythouhkprqmreaahardoopy purohueuummaryflomthePCandsndaittothe mamrychrkfapoingmmmw. Thevendot'elnvoioelseenttotheaoootmngdwk Shcmmhtoaitfurmandlmithampo- rarylemlitiadueoo'ocpaid'hccbrkmmo tunporaryledailylookingforinvoioeetobepaid. Uingzmmngdopnrnththedm-kpnta aoltorkandrwordeitinthedigitalclieoktegieterhe mmwmandmsthodmkmmcamh. Attheendot'thedayalteprinteahardoopyjmmal wmher from the PC, whit]: mammal-Ema the daft mammmdmitmmwmdm forpoelingtothemalledser, meme 239 Usingthedepanmentl'thetreasuryeltpmu the jeurnal 1met-Janet and purchases summery infer- matiun In the appmpriale genera] ledger amuunts- Required a. Create a data aw diagram If the carreal system. b. Create a ayatem numhart 111' the ettrteat system 1:. Analyze the physical internal control mingle-s in the system Mendel year resptmse meet-ding tn the at aategm'iea uf phyaicsa] annual actitiea wet-med in the CD51} inteme] central made]. tL Deau'ihe'tel'l'mntmls Ihalshnuld beinplaeein thieeyetem
