K & V LTD is the supplier of detergents. They employ five (5) workers, which includes an accountant, J. Powell, who carries out all the accounting transactions of the business, including delivering products to customers. The following transactions took place during the month of January 2023:

January 2 Received 120 gallons of bleach @$500 per gallon, 250 gallons of fabric softener @$800 per gallon, 500 gallons of liquid soap @ $1000 per gallon from Randall Distributers Ltd.

January 5 Sold 25 gallons of bleach @$800 per gallon, 50 gallons of fabric softener@1600 per gallon, 100 gallons of liquid soap @ $2000 per gallon. All by cash to B & T Ltd.

January 10 Received 200 gallons of liquid soap @ $1100 on credit from L. Jones Ltd

January 15 Paid L Jones $10,000 by cheque

January 16 Received from M. Gibson $50,000; L Gayle, $80,000 both by cheque and B. Smith $30,000 by cash.

January 20 Sold 50 gallons of bleach @$850, 100 gallons of fabric softener @ $1700 per gallon to XY Ltd. J. Powell received 40% by cash and the balance was made by cheque.

Debtors Balances as at December 31, 2022:

J Powell - $150,000

L. Gayle - $170,000

B Smith -$120,000

Stock at December 2022: 200 gallons of bleach @ $450 per gallon, 50 gallons of fabric softener@ $800 per gallon, 100 gallons of liquid soap @ $1900 per gallon.

On January 1, 2023, Powell returned the following from opening stock:

40 gallons bleach, 10 gallons fabric softener and 20 gallons liquid soap.

On January 30, 2023, the following detergents were missing: 10 gallons bleach, 5 gallons fabric softener, 10 gallons liquid soap.

For the financial year ended December 31, 2022, K & V LTD income statement showed a loss.

The CEO found it to be very surprising and decided that he would do monthly audit of its

financial statements beginning January 31, 2023. Upon investing its books, he realized following:

1. No proper record was kept of items received or sold.
2. Suppliers showed up saying that they were not paid.
3. Debtors reporting that their statement of account is incorrect and threaten to sue the company.
4. The books showed no record of the receipt on January 5 & 20, 2023, nor the cash received from B. Smith on January 20, 2023.

Required:

1. As the new accountant for K & V Ltd, use the information above to prepare the relevant books for the company including the inventory card. (20 marks)
2. State TWO (2) risks K & V LTD will have to face relying entirely on the accountant, J. Powell, to deal with all the transactions of the company which includes processing orders, authorizing payments, recording transactions, and receiving and delivering products to customers. (5 marks)
3. As a newly employed junior accountant you are being charged with the responsibility by the Manager of K & V LTD to implement strategies to control the risks stated in number two (2) above. Outline in a report to Mr. Gary Grant, Manager of K & V LTD strategies to control the risk. (20 marks)