Bookstore Operations: Controls, Costs, and Long-Term Gains Essay

The bank statement for Farmer Co. indicates a balance of $7,735 on June 30. After the journals for June had been posted, the cash account had a balance of $4,098. Prepare a bank reconciliation on the basis of the following reconciling items: a) Cash sales of $742 had been erroneously recorded in the cash receipts journal as $724. b) Deposits in transit not recorded by bank, $425. c) Bank debit memo for service charges, $35. d) Bank credit memo for note collected by bank, $2,475 including $75 interest. e) Bank debit memo for $256 NSF (not sufficient funds) check from customer Janice Smith. f) Checks outstanding, $1,860.  

Question 2:

You have decided to open a bookstore that sells textbooks and competes with the campus bookstore.  
List three (3) internal control procedures you would implement in running the store and then:
a) Clearly justify why you think each of the procedures should be implemented.  b) Discuss the implication of short term cost and long term benefit of each procedure. c) Argue on whether the associated risk can be totally eliminated with the implementation of the procedure or not.