iMac Sound Not Working - Volume Control overlay has crossed out circle

Hello,

I'm having a problem with my iMac that just started and I can't seem to find a solution for. I have a pair of external speakers I had plugged into the audio out jack on the back of the computer and it worked just fine. I was able to disconnect it and as expected sound would then flow back to the internal speakers. However, when I did that just now the sound did not flow to the internal speakers and when I try and adjust the volume using the keyboard the translucent volume control shows up on the screen with a circle with a line through it icon (similar to no smoking signs).

Also, in system preferences the volume control sliders is greyed out as is the volume control in the menu bar.

I've restarted and reset the PRAM. The startup chime plays without issue. But I still can't get sound back.

Help! Thanks in advance for your suggestions!