apu acct 300 all week forum

| August 14, 2017

Week 2 forum

The following is an excerpt from a conversation between Eric
Jackson and Carlie Miller. Eric is debating whether to buy a stereo system from
First Audio, a locally owned electronics store, or Dynamic Sound Systems, an
online electronics company.
Eric: Carlie, I don’t know
what to do about buying my new stereo.
Carlie: What’s the problem?

Eric: Well, I can buy it locally at First Audio for
$890.00. But Dynamic Sound Systems has the same system listed for $899.99.

Carlie: So what’s the big deal? Buy it from First
Audio.

Eric: It’s not quite that simple. Dynamic Sound
Systems said something about not having to pay sales tax, since I was out of
state.

Carlie: Yes, that’s a good point. If you buy it at
First Audio, they’ll charge you 6% sales tax.

Eric: But Dynamic Sound Systems charges $13.99 for
shipping and handling. If I have them send it next- day air, it’ll cost $44.99
for shipping and handling.

Carlie: I guess it is a little confusing.

Eric: That’s not all. First Audio will give an additional
1% discount if I pay cash. Otherwise, they will let me use my VISA, or I can
pay it off in three monthly installments.

Carlie: Anything else???

Eric: Well… Dynamic Sound Systems says I have to
charge it on my VISA. They don’t accept checks.

Carlie: I am not surprised. Many online stores don’t
accept checks.

Eric: I give up. What would you do?

1. Assuming that Dynamic
Sound Systems doesn’t charge sales tax on the sale to Eric, which company is
offering the best buy?

2. What might be some
considerations other than price that might influence Eric’s decision on where
to buy the stereo system?Week 3 forumThe following is an
excerpt from a conversation between two sales clerks, Tracy Rawlin and Jeff
Weimer. Both Tracy and Jeff are employed by Magnum Electronics, a locally owned
and operated electronics retail store.

Tracy: Did
you hear the news?

Jeff: What
news?

Tracy:
Bridget and Ken were both arrested this morning.

Jeff:
What? Arrested? You’re putting me on!

Tracy: No,
really! The police arrested them first thing this morning. Put them in
handcuffs, read them their rights— the whole works. It was unreal!

Jeff: What
did they do?

Tracy:
Well, apparently they were filling out merchandise refund forms for fictitious
customers and then taking the cash.

Jeff: I
guess I never thought of that. How did they catch them?

Tracy: The
store manager noticed that returns were twice that of last year and seemed to
be increasing. When he confronted Bridget, she became flustered and admitted to
taking the cash, apparently over $ 15,000 in just three months. They’re going
over the last six months’ transactions to try to determine how much Ken stole.
He apparently started stealing first.

Suggest
appropriate control procedures that would have prevented or detected the theft
of cash.Week 4 forumJas Carillo was discussing
summer employment with Maria Perez, president of Valparaiso Construction
Service:

Maria: I’m
glad that you’re thinking about joining us for the summer. We could certainly
use the help.

Jas:
Sounds good. I enjoy outdoor work, and I could use the money to help with next
year’s school expenses.

Maria: I’ve
got a plan that can help you out on that. As you know, I’ll pay you $4 per
hour; but in addition, I’d like to pay you with cash. Since you’re only working
for the summer, it really doesn’t make sense for me to go to the trouble of
formally putting you on our payroll system. In fact, I do some jobs for my
clients on a strictly cash basis, so it would be easy to just pay you that way.

Jas:
Well, that’s a bit unusual, but I guess money is money.

Maria:
Yeah, not only that, it’s tax-free!

Jas: What
do you mean?

Maria:
Didn’t you know? Any money that you receive in cash is not reported to the IRS
on a W-2 form; therefore, the IRS doesn’t know about the income—hence, it’s the
same as tax-free earnings.

a. Why
does Maria Perez want to conduct business transactions using cash (not check or
credit card)?

b. How
should Jas respond to Maria’s suggestion?Week 5 forumMarriott International, Inc., and Wyndham Worldwide Corporation
are two major owners and managers of lodging and resort properties in the
United States. Abstracted income statement information for the two companies is
as follows for a recent year:

X

Marriott

Wyndham

X

(in millions)

(in millions)

Operating profit
before other expenses and interest

$695

$718

Other income
(expenses)

36

12

Interest expense

(180)

(167)

Income before income
taxes

$551

$563

Income tax expense

93

184

Net income

$458

$379

Balance sheet
information is as follows:

x

Marriott

Wyndham

x

(in millions)

(in millions)

Total liabilities

$7,398

$6,499

Total stockholders’
equity

1,585

2,917

Total liabilities and
stockholders’ equity

$8,983

$9,416

The average liabilities,
stockholders’ equity, and total assets were as follows:

x

Marriott

Wyndham

x

(in millions)

(in millions)

Average total
liabilities

$7,095

$6,582

Average total
stockholders’ equity

1,363

2,802

Average total assets

8,458

9,384

1. Determine the following ratios for both companies (round to one
decimal place after the whole percent):a. Rate earned on total
assetsb. Rate earned on total
stockholders’ equityc. Number of times
interest charges are earnedd. Ratio of liabilities
to stockholders’ equity
2.
Analyze and compare the two comWeek 6 forumThe following conversation
took place between Dean Lancaster, vice president of marketing, and Dina
Conaway, controller of Redwood Computer Company:

Dean: I am
really excited about our new computer coming out. I think it will be a real
market success.

Dina: I’m
really glad you think so. I know that our success will be determined by our
price. If our price is too high, our competitors will be the ones with the
market success.

Dean:
Don’t worry about it. We’ll just mark our product cost up by 25% and it will
all work out. I know we’ll make money at those markups. By the way, what does
the estimated product cost look like?

Dina:
Well, there’s the rub. The product cost looks as if it’s going to come in at
around $1,000. With a 25% markup, that will give us a selling price of $1,250.

Dean: I
see your concern. That’s a little high. Our research indicates that com-puter
prices are dropping and that this type of computer should be selling for around
$900 when we release it to the market.

Dina: I’m
not sure what to do.

Dean: Let
me see if I can help. How much of the $1,000 is fixed cost?

Dina:
About $300.

Dean:
There you go. The fixed cost is sunk. We don’t need to consider it in our
pricing decision. If we reduce the product cost by $300, the new price with a
25% markup would be right at $875. Boy, I was really worried for a minute
there. I knew something wasn’t right.

a. If
you were Dina, how would you respond to Dean’s solution to the pricing problem?

b. How
might target costing be used to help solve this pricing dilemma?Week 7 forumThe following is an excerpt from a
conversation between two employees of Linquest Technologies, Don Corbet and
Rita Shevlin. Don is the accounts payable clerk, and Rita is the cashier.Don: Rita, could I get your opinion on something?
Rita: Sure, Don.
Don: Do you know Margaret, the fixed
assets clerk?
Rita: I know who she is, but I don’t
know her real well. Why?
Don: Well, I was talking to her at
lunch last Tuesday about how she liked her job, etc. You know, the usual … and
she mentioned something about having to keep two sets of books … one for taxes
and one for the financial statements. That can’t be good accounting, can it?
What do you think?
Rita: Two sets of books? It doesn’t
sound right.
Don: It doesn’t seem right to me
either. I was always taught that you had to use generally accepted accounting
principles. How can there be two sets of books? What could be the difference
between the two? How would you respond to
Rita and Don if you were Margaret?

How would you respond to
Rita and Don if you were Margaret?

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