You began your new job as the accountant at Bolivar Industries ...

[brutforce]

You began your new job as the accountant at Bolivar Industries during the month of December. During your firstmonth, you found several interesting issues. 1) While looking through the invoices, you found Invoices 213242, 245271, and 275290 . It appears that invoices243, 244, 272, 273, and 274 are missing. 2) During the month, Clerk  3 issued 250 in refunds as compared to Clerks 1, 2, and 4 who issued less than50 each. 3) The daily cash receipts and bank deposits reconcile, except on Tuesdays during the month. 4) Business is generally brisk during the holiday season, but two weeks before Christmas there was a suddenincrease in slow payments. REQUIRED: Part A: What kind of warning signs could be associated with these issues? Part B: What control could you put in place regarding cash refunds mentioned in Part A (2)?

Question 2

Explain the difference between contributed capital, capital stock, and additional paid-in capital.
 
  What will be an ideal response?

[asware1]

Answer to Question 1

Part A:
1) Missing invoices or gaps in transaction numbers could mean that the invoices
are being used for fraudulent transactions.
2) An unusually high number of refunds for Clerk 3 could mean that theindividual is creating fictitious refunds and pocketing the cash.
3) The difference could mean that receipts are being pocketed before beingdeposited. Maybe there is a person responsible for making the deposits onTuesdays that is the culprit.
4) A sudden increase in slow payments could mean that an employee ispocketing the payments.

Part B:
Surveillance cameras at customer service area.
Place supervisor as a second authorizer on refund transactions.Prohib it cash refunds and require exchanges of merchandise instead.Provide employee training.
Incorporate special alerts for critical dollar thresholds through company software.
Require information about the original transaction to be part of the refundprocess.

Answer to Question 2

Contributed capital is the total amount of cash and other assets invested in a company by its owners. Contributed capital is made up of: a.) Capital stock, which is the par value of issued stock times the number of shares of stock issued; and b.) Additional paid-in capital, which represents the difference between the total par value of issued stock and the market price of the stock at the time the shares were issued.