P7.6 (LO 3) Timmins Grow-Fast spreads herbicides and applies liquid fertilizer for local farmers. On May 31, 2020, the company's Cash account per its general ledger showed a balance of 6,738.90. The bank statement from Manchester Bank on that date showed the following balance. MANCHESTER BANK Checks and Debits Deposits and Credits Daily Balance 5-31 6,968.00 A comparison of the details on the bank statement with the details in the Cash account revealed the following facts. 1. The statement included a debit memo of 40 for the printing of additional company checks. 2. Cash sales of 883.15 on May 12 were deposited in the bank. The cash receipts entry and the deposit slip were incorrectly made for 933.15. The bank credited Timmins for the correct amount. 3. Outstanding checks at May 31 totaled 276.25, and deposits in transit were 1,880.15. 4. On May 18, the company issued check No. 1181 for 685 to H. Moses, on account. The check, which cleared the bank in May, was incorrectly journalized and posted by Timmins for 658. 5. 2,690 was collected by the bank for Timmins on May 31 through electronic funds transfer. 6. Included with the canceled checks was a check issued by Tomins to C. Pernod for 360 that was incorrectly charged to Timmins the bank 7. On May 31, the bank statement showed an NSF charge of 380 for a check issued by Sara Ballard, a customer, to Timmins on account. Instructions a. Prepare the bank reconciliation at May 31, 2020, b. Prepare the necessary adjusting entries for Timmins at May 31, 2020. Decision-Making Across the Organization CT7.4 The board of trustees of a local church is concerned about the internal accounting controls for the offering collections made at weekly services. The trustees ask you to serve on a three-person audit team with the internal auditor of a local college and a public accountant who has just joined the church At a meeting of the audit team and the board of trustees you learn the following. 1. The church's board of trustees has delegated responsibility for the financial management and audit of the financial records to the finance committee. This group prepares the annual budget and ap- proves major disbursements. It is not involved in collections or recordkeeping. No audit has been made in recent years because the same trusted employee has kept church records and served as financial secretary for 15 years. The church does not carry any fidelity insurance. 2. The collection at the weekly service is taken by a team of ushers who volunteer to month. The ushers take the collection plates to a basement office at the rear of the church. They hand their plates to the head usher and return to the church service. After all plates have been turned in the head usher counts the cash received. The head usher then places the cash in the church safe along with a notation of the amount counted. The head usher volunteers to serve for 3 months. 3. The next morning, the financial secretary opens the safe and recounts the collection. The secretary withholds 150-200 in cash, depending on the cash expenditures expected for the week, and de- posits the remainder of the collections in the bank. To facilitate the deposit, church members who contribute by check are asked to make their checks payable to "Cash.'' one 4. Each month, the financial secretary reconciles the bank statement and submits a copy of the recon- ciliation to the board of trustees. The reconciliations have rarely contained any bank errors and have never shown any errors per books. Instructions a. Indicate the weaknesses in internal accounting control over the handling of collections. b. List the improvements in internal control procedures that you plan to make at the next meeting of the audit team for (1) the ushers, (2) the head usher, (3) the financial secretary, and (4) the finance committee. c. What church policies should be changed to improve internal control