Task Team of FUNdaMENTAL aCCOUNtINg School of Business. Sun Yat-sen University Lesson 12 Internal Controls and business ethics Lacy leggs lingerie had the following petty cash transactions in April of the current year April 1 Wrote a $500 check, cashed it, and gave the proceeds to Kate Small, the petty cashier 5 Purchased gift-wrapping paper, $30.30 8 Paid $49.00 COD shipping charges on teddies purchased for resale, terms FOB shipping point. Lacy Leggs uses the perpetual system to account for inventory 14 Paid $6.90 postage to express mail lingerie to a client 19 Reimbursed Ivana Profit, the manager, $70 for a business lunch with a client 20 Purchased gift-wrapping paper, $56.80 21 Paid a courier $25 to deliver merchandise sold to a customer terms fob destination 25 Paid $15.75 COd shipping charges on merchandise purchased for resale, terms FOB 27 Paid $83 for stamps, envelopes, and address lables 30 Sorted the petty cash receipts by accounts affected and exchanged them for a check to Both reimburse the fund for expenditures and decrease the amount of the fund to $400. There was $.25 in the fund Required (1)Prepare the journal entry to establish the petty cash fund (2)Prepare a petty cash payments report for April with these categories: delivery expense entertainment expense, postage expense, merchandise inventory(transportation-in), and office supplies. Sort the payments into the appropriate categories and total the expenditures in each ()Prepare the journal entry to both reimburse and decrease the amount in the fund 2. For each of these five separate cases, identify the principle of internal control that is violated Recommend what the business should do to ensure adherence to principles of internal control (1 )Jack McSweeny records all incoming customer cash receipts for his employer and writes off uncollectible accounts at year-end (2)At Tasty Foods, Bill and Betty work the cash registers and bag groceries. To alleviate the boredom they switch off between bagging and running the cash register every half hour (3)Marcia Ball does all the posting of accounts payable charges at the Provincial Motel. She prepares the accounts payable vouchers for payment, signs the vouchers, and wirtes the checks (4)Melissa Hancock prides herself on hiring quality workers who require little supervision. She sees no reason toto insult her best cashier by requiring approval signatures on such small amounts as petty cash disbursements and replenishment (5)Homer Scrooge has just calculated the total amount his business has paid in insurance premiums over the last ten His actaul insurance claims have only been 10% of the total paid. He decides to self-insure and save on premiumsTask Team of FUNDAMENTAL ACCOUNTING School of Business, Sun Yat-sen University Lesson 12 Internal Controls and Business Ethics Exercise 1.Lacy Leggs Lingerie had the following petty cash transactions in April of the current year: April 1 Wrote a $500 check, cashed it, and gave the proceeds to Kate Small, the petty cashier. 5 Purchased gift-wrapping paper, $30.30. 8 Paid $49.00 COD shipping charges on teddies purchased for resale, terms FOB shipping point. Lacy Leggs uses the perpetual system to account for inventory. 14 Paid $6.90 postage to express mail lingerie to a client. 19 Reimbursed Ivana Profit, the manager, $70 for a business lunch with a client. 20 Purchased gift-wrapping paper, $56.80. 21 Paid a courier $25 to deliver merchandise sold to a customer, terms FOB destination. 25 Paid $15.75 COD shipping charges on merchandise purchased for resale, terms FOB shipping point. 27 Paid $83 for stamps, envelopes, and address lablels 30 Sorted the petty cash receipts by accounts affected and exchanged them for a check to Both reimburse the fund for expenditures and decrease the amount of the fund to $400. There was $165.25 in the fund. Required (1) Prepare the journal entry to establish the petty cash fund. (2)Prepare a petty cash payments report for April with these categories: delivery expense, entertainment expense, postage expense, merchandise inventory (transportation-in), and office supplies. Sort the payments into the appropriate categories and total the expenditures in each category. (3)Prepare the journal entry to both reimburse and decrease the amount in the fund. 2.For each of these five separate cases, identify the principle of internal control that is violated. Recommend what the business should do to ensure adherence to principles of internal control. (1)Jack McSweeny records all incoming customer cash receipts for his employer and writes off uncollectible accounts at year-end. (2)At Tasty Foods, Bill and Betty work the cash registers and bag groceries. To alleviate the boredom they switch off between bagging and running the cash register every half hour. (3)Marcia Ball does all the posting of accounts payable charges at the Provincial Motel. She prepares the accounts payable vouchers for payment, signs the vouchers, and wirtes the checks. (4)Melissa Hancock prides herself on hiring quality workers who require little supervision. She sees no reason to to insult her best cashier by requiring approval signatures on such small amounts as petty cash disbursements and replenishment. (5)Homer Scrooge has just calculated the total amount his business has paid in insurance premiums over the last ten years. His actaul insurance claims have only been 10% of the total paid. He decides to self-insure and save on premiums