Class Exercise 8

School: CDI College of Business, Technology and Health Care - Course: SUPPLY CHAIN MANAGEM MISC - Subject: Accounting

E8-2 Yorkshire Bike Shop has a liberal return policy. A customer can return any product for a full refund within 14 days of purchase. When a customer returns merchandise, Yorkshire policy specifies the following: Store clerk issues a prenumbered return slip, refunds cash from the cash register, and keeps a copy of the return slip for review by the manager. Store clerk places the returned goods back on the shelf or on the floor as soon as possible. Yorkshire uses a periodic inventory system. Required . How can a dishonest store clerk steal from Yorkshire? A dishonest clerk can create a false return for an item that was sold. And steal the cash from the register. What part of company policy enables the store clerk to steal without getting caught? Not requiring receipt for transaction. Not having the manager verify the merchandise and the original purchase receipt. Not having a purchase return and allowance journal. How can Yorkshire improve its internal controls to prevent this theft? Establish security cameras. Require receipts for all returns. Have the customer sign the return slip and place the slip in a special box. Have the manager check the return slip at regular intervals. Have the manager check the items returned before placing it back on the shelfs. Do inventory count on a regular basis. Have a purchase return and allowance journal

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