Wgu Financial Case 6-2

Problem 6-1A 1. Principle violated- Divide responsibilities for related transactions and separate recordkeeping from custody of assets. The business will need to separate the duties of Ms. Flat. She is currently recording all cash receipts and posting the payments to the customer accounts. This leaves much room for error and fraud. Ms. Flat also has control or access over all cash receipts as well as being responsible for posting the payment to accounts. 2. Principle violated- Establish Responsibilities. The task of petty cash custodian should only be the responsibility of one person. This should be the only person responsible for the process it would be hard to determine who was to blame if the petty cash came up short. The company could
It does not matter how much money Ms. West would be saving by not having bonding insurance in place for the employees, if there were theft or fraud by the employees it could be costing the company much more than the cost on the insurance. Ms. West needs to look for another way to cut costs without this insurance they are unprotected from fraud and theft. The insurance policy needs to be put back into place. Problem 6-2A May 1Petty Cash250 Cash250To establish a petty cash fund.May 15Miscellaneous Expenses63.68Janitorial Expenses78.00Postage Expenses43.50Advertising Expenses57.15 Cash Over and short3.48 Cash238.85To reimburse petty cash.May 16Petty Cash200 Cash200To increase the petty cash amount. May 31Postage expenses48.36Miscellaneous Expenses38.50Delivery Expenses39.75 Cash over and short30.00 Cash156.61To reimburse petty cash.May 31Petty Cash50 Cash50To decrease the petty cash fund amount. Part 2 If the petty cash fund is not reimbursed at the end of the accounting period, the financial statements would show both an overstated cash asset and understated expenses (or assets) that were paid out of the petty cash fund. (B Chiappeta, 2011) Works Cited B Chiappeta, ,. n. (2011). Financial Managerial Accounting. In Financial Managerial