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Payroll internal control procedures Big Howie’s Hot Dog Stand is a fast-food restaurant specializing in hot dogs and hamburgers. The store employs 8 full-time and 12 part-time workers. The store’s weekly payroll averages $5,600 for all 20 workers. Big Howie’s Hot Dog Stand uses a personal computer to assist in preparing paychecks. Each week, the store’s accountant collects employee time cards and enters the hours worked into the payroll program. The payroll program calculates each employee’s pay and prints a paycheck. The accountant uses a check-signing machine to sign the paychecks. Next, the restaurant’s owner authorizes the transfer of funds from the restaurant’s regular bank account to the payroll account. For the week of May 12, the accountant accidentally recorded 100 hours worked instead of 40 hours for one of the full-time employees. Does Big Howie’s Hot Dog Stand have internal controls in place to catch this error? If so, how will this error be detected?

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Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124

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Section
BuyFindarrow_forward

Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124
Chapter 11, Problem 15E
Textbook Problem
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Payroll internal control procedures

Big Howie’s Hot Dog Stand is a fast-food restaurant specializing in hot dogs and hamburgers. The store employs 8 full-time and 12 part-time workers. The store’s weekly payroll averages $5,600 for all 20 workers.

Big Howie’s Hot Dog Stand uses a personal computer to assist in preparing paychecks. Each week, the store’s accountant collects employee time cards and enters the hours worked into the payroll program. The payroll program calculates each employee’s pay and prints a paycheck. The accountant uses a check-signing machine to sign the paychecks. Next, the restaurant’s owner authorizes the transfer of funds from the restaurant’s regular bank account to the payroll account.

For the week of May 12, the accountant accidentally recorded 100 hours worked instead of 40 hours for one of the full-time employees.

Chapter 11, Problem 15E, Payroll internal control procedures Big Howies Hot Dog Stand is a fast-food restaurant specializing Does Big Howie’s Hot Dog Stand have internal controls in place to catch this error? If so, how will this error be detected?

To determine

Identify whether Restaurant B has internal controls to catch the payroll error.

Explanation of Solution

Internal control: Internal control is a process which ensures continuous reliability of accomplishment of a company’s objectives, related to operations, financial reporting, and in conformity with laws and regulations. The following are the principles of internal control:

  • Authorizing the responsibility
  • Segregation of duties
  • D...
To determine

Identify the way to detect the payroll error.

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Financial Accounting
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