original question is.

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help me reply to this.

Due Day 3 Credit memos are created when a product is returned. Credit memos reduce A/R (accounts receivable) by crediting the account, and it writes off the invoice. This also records a debit to the Sales Returns and Allowances account. You have noticed that the A/R clerk has created an abnormally high number of credit memos. You also notice the inventory does not reflect the additional inventory resulting from the sales returns, Respond to the following in a minimum of 175 words, What would you do, and how would you document your decision? There are some things to research what is going on with this particular clerk. The problem appears to be that this clerk has a lot of return memos stating there are returns, but the inventory level is not reflecting that suggesting that there may be inventory theft. 1- If available, review any security footage to see if they physical theft has occurred. 2- Investigate the returns themselves. Was there an original receipt provided to show the customer was returning a legit purchase instead of the clerk stealing inventory and creating a return? 3- Did the customer sign off on the return to show that the customer in fact originate a return instead of the clerk creating a return As for the security footage, we can obtain a copy of it review it and document if we notice any theft As for the returns of themselves. We want to see these returns in the system. I'd check to see if there is an original receipt that was scanned so the retum is matched with a purchase in the system to verify that the return was done on a product actually bought. I'd also look to see if there is a customer signature on it. This can also be used with the security footage to venfy if an actu customer signed the return receipt. If there's a lot of returns with no matching purchase receipts, I'd question this. If customer signatures are missing. Id question this as well. 1- If available, review any security footage to see if they physical theft has occurred. The use of security footage in my opinion is not effective. Number 1. you do not know if theft has occurred and 2. you clearly do not know when it occurred. Therefore, it would take countless hours / days of someone watching video. I believe that security cameras are only effective if you know a narrow timeframe of when the theft occurred. 2- Investigate the returns themselves. Was there an original receipt provided to show the customer was returning a legit purchase instead of the clerk stealing inventory and creating a return? Remember this is A/R so there is no clerk or point of sale involved. The seller ships the goods to the buyer who promises to pay in the future (thus the involvement of an A/R clerk. 3- Did the customer sign off on the return to show that the customer in fact originate a return instead of the clerk creating a return? See my point #2