Module 4 Act 5050

Your client, Corp. B, is a trading or distributor of home living product. Corp B import goods and sells them to its customers who are retail stores. In the current year, Corp. B's financial statements reported an increase in net income. The increase was driven by increased sales. Corp B's accounts receivable also increased rapidly. Corp B reportedly has many new customers.You are informed that there may be a fictitious revenue generated using fictitious customers. Corp B makes fictitious credit sales using bogus customers, and when receivables are due, management make kiting in order to look like the fictitious accounts receivable paid by their customer.  What kind of audit procedure will you use to examine for possible kiting?

Your client, Corp. B, is a trading or distributor of home living product. Corp B import goods and sells them to its customers who are retail stores. In the current year, Corp. B's financial statements reported an increase in net income. The increase was driven by increased sales. Corp B's accounts receivable also increased rapidly. Corp B reportedly has many new customers.You are informed that there may be a fictitious revenue generated using fictitious customers. Corp B makes fictitious credit sales using bogus customers, and when receivables are due, management make kiting in order to look like the fictitious accounts receivable paid by their customer.  Question:a. Explain how the fraud scheme can be carried out by Corp B?b. What kind of audit procedure will you use to examine for possible kiting?

Elaborate and discuss the following quetions 1. While you are working as a bookkeeper in retail company, Sage 50 is giving you a warning message that the customer has exceeded his credit limit. What would you do? How would you advice your manager as a professional? 2. What is overdraft and how does it happen? 3. What is a Cash Flow Report? What does it help us? 4. Explain the concept of aging in customer accounts? 5. How do you record a Senior's Discount?

(Receivables Management) As the manager of the accounts receivable department for Beavis Leather Goods, Ltd., you recently noticed that Kelly Collins, your accounts receivable clerk who is paid $1,200 per month, has been wearing unusually tasteful and expensive clothing. (This is Beavis’s first year in business.) This morning, Collins drove up to work in abrand new Lexus.Naturally suspicious by nature, you decide to test the accuracy of the accounts receivable balance of $192,000 as shown in the ledger. The following information is available for your first year (precisely 9 months ended September 30, 2017) in business.(1) Collections from customers $188,000(2) Merchandise purchased 360,000(3) Ending merchandise inventory 90,000(4) Goods are marked to sell at 40% above cost.InstructionsAssuming all sales were made on account, compute the ending accounts receivable balance that should appear in the ledger, noting any apparent shortage. Then, draft a memo dated October 3, 2017, to Mark…

Assume that you are a cashier and your manager requires that you immediately enter each sale when it occurs. Recently, lunch hour traffic has increased and the assistant manager asks you to avoid delays by taking customers’ cash and making change without entering sales. The assistant manager says she will add up cash and enter sales after lunch. She says that, in this way, customers will be happy and the register record will always match the cash amount when the manager arrives at three o’clock. The advantages to the process proposed by the assistant manager include improved customer service, fewer delays, and less work for you. The disadvantage is that the assistant manager could steal cash by simply recording less sales than the cash received and then pocketing the excess cash. You decide to reject her suggestion without the manager’s approval and to confront her on the ethics of her suggestion. Required Propose and evaluate two other courses of action you might consider, and explain…

Fordson Bank operates a branch in a relatively small rural community. Fordson has a strong customer service focus and knows that branch visits can be important in fostering a reputation for good customer service. However, as internet banking increases in popularity, the financial staff at Fordson question whether the costs of the branch are worth it. As part of looking at the question, a financial analyst has collected monthly data on the number of customer visits to the branch and the operating cost of the branch over the last fiscal year. The data follow: Month Customer Visits 1 2 3 4 5 6 7 8 10 12 962 1,378 1,170 1,014 1,586 1,222 1,144 1,248 1,430 1,040 1,092 1,066 Branch Cost $ 71,534 90,046 80,790 73,848 99,302 83,104 79,633 84,261 Branch cost= 92,360 75,005 77,319 76,162 Required: a. Estimate the monthly fixed costs and the unit variable cost per customer visit using the high-low estimation method. Note: Round variable cost per unit to 2 decimal places. per visit Customer visits

8) Another metric of operational efficiency that your book also talks about is Days' Sales in Receivables. What does it mean when a firm's Days' Sales in Receivable is decreasing. That: The efficiency of Receivable Department is moving in the wrong direction. The quality of the firm's product has lost its shine. The winter days have slowed down the energy of the firm's sale associates. The efficiency of the firm's receivable collection is moving in the right direction. None of the above. The winter days have slowed down the the energy of the firm's sales associates The efficiency of the firm's receivable collection is moving in the right direction. None of the above

Assume that you are a cashier and your manager requires that you, as cashier, immediately enter each sale when it occurs. Recently, lunch hour traffic has increased and the assistant manager asks you to avoid delays by taking customers’ cash and making change without entering sales. The assistant manager says she will add up cash and enter sales after lunch. She says that, in this way, the customers will be happy and the register record will always match the cash amount when the manager arrives at three o’clock. The advantage of the process proposed by the assistant manager includes improved customer service, fewer delays, and less work for you. The disadvantage is that the assistant manager could steal cash by simply recording less sales than the cash received and pocketing the excess cash. You decide to reject her suggestion without the manger's approval and to confront her on the ethics of her suggestion. Required:   Propose and evaluate two other courses of action you might…

The COVID-19 pandemic has affected one of your customers, NEST Ltd adversely. Even though the economies are fast recovering, they have contacted your company to request to purchase on credit instead of cash on delivery. Your boss, Alan, the Marketing Manager has instructed you to review their request. He has asked you to review NEST Ltd’s latest set of financial statements.   (a)In addition, identify other information(other than balance sheet, incomes statement and cash flow statement) that will be helpful in deciding whether to accede to NEST Ltd’s request?    (b)You have also noticed that compared to last year, the allowance for bad debt for Nest Ltd has increased from 2% to 4 % of the accounts receivable. Discuss how this information will impact your review.

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You are a financial adviser with a client in the wholesale produce business that just completed its first year of operations. Due to weather conditions, the cost of acquiring produce to resell has escalated during the latter part of this period. Your client, Javonte Gish, mentions that because her business sells perishable goods, she has striven to maintain a FIFO flow of goods. Although sales are good, the increasing cost of inventory has put the business in a tight cash position. Gish has expressed concern regarding the ability of the business to meet income tax obligations. Required Prepare a memorandum that identifies, explains, and justifies the inventory method you recommend that Ms. Gish adopt.

Below are several scenarios related to control activities of a company.1. A manufacturing company compares total sales in the current year to those in the previous year but does not compare the cost of production.2. So that employees can have easy access to office supplies, a company keeps supplies in unlocked cabinets in multiple locations.3. At the end of each day, a single employee collects all cash received from customers, records the total, and makes the deposit at the bank.4. At the end of the year only, the company compares its cash records to the bank’s records of cash deposited and withdrawn during the year.5. A company encourages employees to call an anonymous hotline if they believe other employees are circumventing internal control features.6. All employees have the authority to refund a customer’s money.Required:For each scenario, determine which control activity is violated. Control activities include separation of duties, physical controls, proper authorization, employee…

Assume that you are a cashier, and your manager requires that you immediatelyenter each sale when it occurs. Recently, lunch hour traffic has increased, and theassistant manager asks you to avoid delays by taking customers’ cash and makingchange without entering sales. The assistant manager says she will add up cash andenter sales after lunch. She says that, in this way, customers will be happy to, andthe register record will always match the cash amount when the manager arrives atthree o’clock.The advantages to the process proposed by the assistant manager include improvedcustomer service, fewer delays, and less work for you. The disadvantage is that the assistant manager could steal cash by simply recording less sales than the cashreceived and them pocketing the excess cash. You decide to reject her suggestionwithout the manager’s approval and to confront her on the ethics of her suggestion.Propose and evaluate two other courses of action you might consider and explainwhy

Bush-Baby Hotels Co operates a chain of 18 hotels located across the country. Each hotel has bedrooms, a restaurant and leisure club facilities. Most visitors to the restaurant and leisure club are hotel guests; however, these facilities are open to the public as well. Hotel guests generally charge any costs to their room but other visitors must make payment directly to the hotel staff. During the year, senior management noticed an increased level of cash discrepancies and inventory discrepancies, and they suspect that some employees have been stealing cash and goods from the hotels. They are keen to prevent this from reoccurring and are considering establishing an internal audit department to undertake a fraud investigation. Required(a) Explain how the new internal audit department of Bush-Baby Hotels Co could assist the directors in preventing and detecting fraud and error with limitation of internal auditdepartment.  (b)The directors would like the internal audit department to have…

As the manager of the accounts receivable department for Beavis Leather Goods, Ltd., you recently noticed that Kelly Collins, your accounts receivable clerk who is paid $12000 per month, has been wearing unusually tasteful and expensive clothing. (This is Beavis's first year in business.) This morning, Collins drove up to work in a brand new Lexus.   Naturally suspicious by nature, you decide to test the accuracy of the accounts receivable balance of $1,320,000 as shown in the ledger. The following information is available for your first year (precisely 9 months ended September 30, 2010) in business. Collections from customers .......................$1,980,000 Merchandise purchased................................3,600,000 Ending merchandise inventory........................900,000 Goods are marked to sell at 40% above cost. Draft a memo dated on October 3, 20x7 to Jay Corales, the branch manager explaining the fact in this situation. Remember that this problem is serious and you do not…

As the manager of the accounts receivable department for Beavis Leather Goods, Ltd., you recently noticed that Kelly Collins, your accounts receivable clerk who is paid $12000 per month, has been wearing unusually tasteful and expensive clothing. (This is Beavis's first year in business.) This morning, Collins drove up to work in a brand new Lexus. Naturally suspicious by nature, you decide to test the accuracy of the accounts receivable balance of $1,320,000 as shown in the ledger. The following information is available for your first year (precisely 9 months ended September 30, 2010) in business. Collections from customers .......................$1,980,000 Merchandise purchased................................3,600,000 Ending merchandise inventory........................900,000 Goods are marked to sell at 40% above cost. Assuming all sales were made on account, compute the ending balance that should appear in the ledger, noting any apparent shortage.

Accounting Bluepanda Inc. sales electronics parts, which finds application in various equipment used mainly in construction industry. The company has faced some issues in managing its working capital and has lost some key suppliers in the recent past due to mismanagement of cash and delay in vendor payments. Bluepanda has hired you as a financial consultant to look into this matter and provide a comprehensive perspective. The management also desired to maintain a cash balance of more than $15,000 each month as financial prudence. After considering all the information provided to you, you decided that having a cash budget would be the first step to understand the shortfall/surplus of cash and will aid in working capital management. You arranged a meeting with the marketing team and gathered the following information: Sales Forecast Month- year Sales Nov. 2022 $50,000 Dec 2022 $60,000 Jan 2023 $60,000 Feb 2023 $70,000 March 2023 $75,000 April 2023…

Dorothy Koehl recently leased space in the Southside Mall and opened a new business, Koehl's Doll Shop. Business has been good, but Koehl frequently runs out of cash. This has necessitated late payment on certain orders, which is beginning to cause a problem with suppliers. Koehl plans to borrow from the bank to have cash ready as needed, but first she needs a forecast of how much she should borrow. Accordingly, she has asked you to prepare a cash budget for the critical period around Christmas, when needs will be especially high. Sales are made on a cash basis only. Koehl's purchases must be paid for during the following month. Koehl pays herself a salary of $4,500 per month, and the rent is $2,600 per month. In addition, she must make a tax payment of $10,000 in December. The current cash on hand (on December 1) is $400, but Koehl has agreed to maintain an average bank balance of $4,500 - this is her target cash balance. (Disregard the amount in the cash register, which is…