Question

Internal Controls for Cash Received on Account – Hudson Company sells supplies to restaurants. Most sales are made on open account (credit sales). Hudson has requested your help in designing procedures for processing checks received from its customers. Briefly describe the procedures that should be used in each of the following departments:
a. Mailroom
b. Treasurer’s department
c. Controller’s department

Answer 1

The procedures for the processing of checks received from the customers are:

a) Mailroom : When the mailroom receives a cheque from the Debtor, it must record the receipt of the same with them and transferred the same to Treasury department with a receipt.

b) Treasurer's department : The treasury department when receives check from the Mailroom, record the same with them and deposit the same to the bank account. Treasurer draws two vouchers, one for its department and the other for the Controller's department.

c) Controller's department: On the receipt of the voucher from the Treasurer's department, the controller's department would going to record the payment receipt in the books ie. in the Debtors account and put the posting record number on the voucher and keep the voucher in their records.

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