Solved: Transco Printers makes printers for personal

computers and maintains a

Transco Printers makes printers for personal computers and maintains a

Transco Printers makes printers for personal computers and maintains a factory outlet
showroom through which it sells its products to the public. The company’s management has set
up a system of internal controls over the inventory of printers to prevent theft and to ensure the
accuracy of the accounting records.
All printers in inventory at the factory outlet are kept in a secured warehouse behind the
showroom, except for the sample printers on display. Only authorized personnel may enter the
warehouse. When a customer buys a printer, a sales invoice is written in triplicate by the cashier
and is marked “paid.” The sales invoices are sequentially numbered, and all must be
accounted for. The cashier sends the pink copy of the completed invoice to the warehouse,
gives the blue copy to the customer, and keeps the green copy. The customer drives around to
the warehouse entrance. The warehouse attendant takes the blue copy of the invoice from the
customer and gives the customer the printer and the pink copy of the invoice.
The company maintains a perpetual inventory system for the printers at the outlet. The
warehouse attendant at the outlet signs an inventory transfer sheet for each printer received. An
accountant at the factory is assigned responsibility for maintaining the inventory records based
on copies of the inventory transfer sheets and the sales invoices. The records are updated daily
and may be accessed by computer but not modified by the sales personnel and the warehouse
attendant. The accountant also sees that all prenumbered inventory transfer sheets are
accounted for and compares copies of them with the ones signed by the warehouse attendant.
Once every three months, the company’s internal auditor takes a physical count of the printer
inventory and compares the results with the perpetual inventory records.
All new employees are required to read a sales and inventory manual and attend a two-hour
training session about the internal controls. They must demonstrate that they can perform the
functions required of them.

Required
1. Give an example of how each of the following control activities is applied to internal control
over inventory at Transco Printers:
a. Authorization
b. Recording transactions
c. Documents and records
d. Physical controls
e. Periodic independent verification
f. Separation of duties
g. Sound personnel practices
2. Can the described system protect against an employee who picks up a printer and carries it
off when leaving work?

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 Transco Printers makes printers for personal computers and maintains a

ANSWER
https://solvedquest.com/transco-printers-makes-printers-for-personal-computers-and-maintains-
a/

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