Financial & Managerial Accounting 3rd Edition by Charles Horngren,Harrison, Walter,Suzanne Oliver

Exercise 26

Explaining common types of receivables and designing internal controls for receivables
Tutor Tots performs tutoring services on account, so virtually all cash receipts arrive by mail and are then placed in the petty cash box for a week. Average daily cash receipts are $24,000. Jennifer Swanson, the owner, has just returned from a meeting with new ideas for the business. Among other things, Swanson plans to institute stronger internal controls over cash receipts from customers.
Requirements
1. What types of receivables are most likely to be collected by Tutor Tots
2. List the following procedures in the correct order.
a. Another person, such as the owner or the manager, compares the amount of the bank deposit to the total of the customer credits posted by the accountant. This gives some assurance that the day's cash receipts went into the bank and that the same amount was posted to customer accounts.
b. The person who handles cash should not prepare the hank reconciliation.
c. An employee with no access to the accounting records deposits the cash in the bank immediately.
d. The remittance slips go to the accountant, who uses them for posting credits to the customer accounts.
e. Someone other than the accountant opens the mail. This person separates customer checks from the accompanying remittance slips.