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Concept explainers
Ethical Decision Making: A Real-Life Example
When some people think about inventory theft, they imagine a shoplifter running out of a store with goods stuffed inside a jacket or bag. But that’s not what the managers thought at the Famous Footwear store on Chicago’s Madison Street. No, they suspected their own employees were the main cause of their unusually high inventory theft. One scam involved dishonest cashiers who would let their friends take a pair of Skechers without paying for them. To make it look like the shoes had been bought, cashiers would ring up a sale, but instead of charging $50 for shoes, they would charge only $2 for a bottle of shoe polish. That’s when the company's managers decided to put its register-monitoring system to work. In just two years, the company cut its Madison Street inventory losses in half. Here’s how a newspaper described the store’s improvements:
Retailers Crack Down on Employee Theft SouthCoast Today, Chicago By Calmetta Coleman, Wall Street Journal Staff Writer
… Famous Footwear installed a chainwide register-monitoring system to sniff out suspicious transactions, such as unusually large numbers of refunds or voids, or repeated sales of cheap goods.
… [B]efore an employee can issue a cash refund, a second worker must be present to see the customer and inspect the merchandise.
… [T]he chain has set up a toll-free hotline for employees to use to report suspicions about co-workers. Required:
- 1. To which of the three types of employee fraud does this article relate?
- 2. Explain how the register-monitoring system would allow Famous Footwear to cut down on employee theft.
- 3. What is the name of the control principle that is addressed by Famous Footwear’s new cash refund procedure?
- 4. Think of and describe at least four different parties that are harmed by the type of inventory theft described in this case.
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Chapter 5 Solutions
GEN COMBO LL FUNDAMENTALS OF FINANCIAL ACCOUNTING; CONNECT ACCESS CARD
- During May, Schultz Company produced 12,000 units of a product called Premium. Premium has a standard materials cost of three pieces per unit at $6 per piece. The actual materials used consisted of 35,000 pieces at a cost of $175,000. Actual purchases of the materials amounted to 45,000 pieces at a cost of $225,000. Compute the two materials variances.arrow_forwardCaropola is a drilling company that operates an offshore Oilfield in Feeland. Five yearsago, Maine had a major oil discovery and granted licenses to drill oil to reputable,experienced drilling companies. The licensing agreement requires the company toremove the oil rig at the end of production and restore the seabed. 90% ofthe eventual costs of undertaking the work relate to the removal of the oil rig andrestoration of damage caused by building it and ten percent arise through theextraction of the oil. At the Statement of Financial Position date (December 312025), the rig has been constructed but no oil has been extractedOn January 1st 2023, Caropola obtained the license to construct an oil rig at a cost of$500 million. Two years later the oil rig was completed. The rig is expected to beremoved in 20 years from the date of acquisition. The estimated eventual cost is 100million. The company’s cost of capital is 10% and its year end is December 31st. This companyuses straight line…arrow_forwardPlease help. Mind that i also need the expense for 2025arrow_forward
- At the beginning of the year, manufacturing overhead for the year was estimated to be $945,600. At the end of the year, actual direct labor hours for the year were 40,000 hours, the actual manufacturing overhead for the year was $910,200, and the manufacturing overhead for the year was overapplied by $50,400. If the predetermined overhead rate is based on direct labor hours, then the estimated direct labor hours at the beginning of the year used in the predetermined overhead rate must have been _. Currect answerarrow_forwardAnderson Technologies has 40,000,000 shares outstanding with a current market PPS of $30.25. If the firm has total assets of $750M, total liabilities of $250M, and net income of $480M, it would have a P/E of _ and a Market-to-Book ratio of _. General Accounting problem 2.4arrow_forwardThe first-quarter tax return needs to be filed for Prevosti Farms and Sugarhouse by April 30, 2023. For the taxes, assume the second February payroll amounts were duplicated for the March 10 and March 24 payroll periods, and the new benefit elections went into effect as planned. The form was completed and signed on April 11, 2023. Benefit Information Exempt Federal FICA Health Insurance Yes Yes Life Insurance Yes Yes Long-term Care Yes Yes FSA Yes Yes 401(k) Yes No Gym No No Owner's name Address Phone Number of employees Gross quarterly wages (exclusive of fringe benefits) Federal income tax withheld 401(k) contributions Section 125 withheld Gym Membership (add to all taxable wages, not included above) Month 1 Deposit Month 2 Deposit Toni Prevosti 820 Westminster Road, Bridgewater, VT 05520. 802-555-3456 8 $ 36,673.30 $ 510.00 $ 1,427.46 $ 4,080.00 $ 90.00 $ 0.00 $ 2,171.62 Month 3 Deposit Required: $ 3,338.93 Complete Form 941 for Prevosti Farms and Sugarhouse. Prevosti Farms and…arrow_forward
- Anderson Technologies has 40,000,000 shares outstanding with a current market PPS of $30.25. If the firm has total assets of $750M, total liabilities of $250M, and net income of $480M, it would have a P/E of _ and a Market-to-Book ratio of _. Accurate Answerarrow_forwardAnderson Technologies has 40,000,000 shares outstanding with a current market PPS of $30.25. If the firm has total assets of $750M, total liabilities of $250M, and net income of $480M, it would have a P/E of _ and a Market-to-Book ratio of _. Question 5arrow_forwardKindly help me with accounting questionsarrow_forward
- What is the dollar amount of interest accounting questionarrow_forwardIn the current year, Palmer Industries incurred $180,000 in actual manufacturing overhead cost. The Manufacturing Overhead account showed that overhead was overapplied in the amount of $9,000 for the year. If the predetermined overhead rate was $10.00 per direct labor-hour, how many hours were worked during the year? ANSWER?arrow_forwardWhat is the cost of goods manufactured for 2023 ??arrow_forward
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