Sun Skin Care makes all sales on credit. Cash receipts arrive by mail, usually within 30 days of…

Sun Skin Care makes all sales on credit. Cash receipts arrive by mail, usually within 30 days of the sale. Nancy Brown opens envelopes and separates the checks from the accompanying remittance advices. Brown forwards the checks to another employee, who makes the daily bank deposit but has no access to the accounting records. Brown sends the remittance advices, which show the amount of cash received, to the accounting department for entry in the accounts receivable. Brown’s only other duty is to grant allowances to customers. (An allowance decreases the amount that the customer must pay.) When Brown receives a customer check for less than the full amount of the invoice, she records the allowance in the accounting records and forwards the document to the accounting department.

❙ Required

You are a new employee of Sun Skin Care. Write a memo to the company president identifying the internal control weakness in this situation. State how to correct the weakness. (p. 232)

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