College Accounting 2nd Edition by David Haddock, John Price,Michael Farina

Exercise 15

Jim Springs is the owner and manager of California Car Wash. California Car Wash provides various car wash and car detailing services. California Car Wash also sells snacks and gift items in its waiting area.
California Car Wash has one cash register, where all payments from customers are received. There is a $400 change fund in the cash register at the beginning of each day. There are two cash register clerks, George and Alice, who work two different shifts during the day. Jim is quite busy as an owner and operator of the car wash, and trusts George and Alice completely. Jim does not see the need to count out the cash register drawers with George or Alice after their shifts are ended. Additionally, Jim prints out a cash register tape at the end of the day, but does not compare it to the deposit.
During the first week of August, Jim noticed an increase in business. However, the cash deposits to the bank were less than Jim thought they should be. He has contacted you for advice. You have compiled the sales per the cash register tapes, and the cash counts, for the period from August 1 to August 7. These amounts are as follows:

1. Calculate the total amount of cash sales and cash shortages for the period August 1 to August 7.
2. Prepare a journal entry dated August 7 that summarise the cash sales and cash shortages from August 1 to August 7. Use 56 as the page number.
3. What changes in procedures would you recommend to provide better control over cash receipts?