Suppose that you are the credit manager for a small clothing manufacturer. You main responsibility is deciding to whom your company should extend credit. Respond to the following question. Dull’s Department Store, Inc., is a large publicly traded corporation that issues commercial paper. How can you inexpensively access its creditworthiness? Will the strategy in a. work as well if markets are inefficient?

Suppose that you are the credit manager for a small clothing manufacturer. You main responsibility is deciding to whom your company should extend credit. Respond to the following question. Dull’s Department Store, Inc., is a large publicly traded corporation that issues commercial paper. How can you inexpensively access its creditworthiness? Will the strategy in a. work as well if markets are inefficient?

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter15: Financial Statements And Year-end Accounting For A Merchandising Business

Section: Chapter Questions

Problem 1MYW

See similar textbooks

Similar questions

Suppose you are the marketing manager of the credit card department of a financial institution. After examining current market conditions, the objective is to support the company’s growth through a market penetration strategy. How would you apply this strategy to increase the profitability of the credit card?
Tri-City Grocers is a chain of grocery stores that just hired a new CFO. Which of the following actions would you expect this CFO to adopt given her statement that she wants to implement a more flexible financing policy for the firm? I. Easing the credit terms given to customers II. Increasing the amount of inventory carried by each grocery store III. Borrowing funds to keep more cash available for store operations IV. Decreasing the firms' investments in marketable securities Group of answer choices A. II, III, and IV only B. I, II, III, and IV C. II and IV only D. I, II, and III only
A. Determine the decision nature of each of the following issues: What are the least expensive sources of funds for the firm? A large retailer such as LuLu Hypermarket, deciding whether to open another store? Will we purchase on credit or will we borrow in the short term and pay cash? The decision to develop and market a new software by a company such as Microsoft. Choosing among lenders and among loan types?
A large retailer such as Walmart possesses power over smaller suppliers. In theory, Walmart could force these suppliers to sell on payment terms that were well beyond a typical industry norm. How would this impact Walmart’s cash cycle? How would this impact the suppliers’ cycle? Are there any ethical issues involved in such a practice?
Assume you are proprietor of any firm you like. Briefly describe the products or servicesyour firm will offer for sale. Would you extend trade credit to your customers? Why orwhy not? How will this decision affect your sales and profits? If you choose to extendcredit, how would you ensure that your firm is paid by its customers?
Pakhama Enterprises wants to extent its credit terms in order to increase the sales to grow the business. A consultant has, however, warned them that this can lead to overtrading. Do some research on overtrading and prepare and e‐mail to management in whichyou explain what overtrading is as well as what the dangers of overtrading are. Remember to reference your answer and add your reference list to the bottomof this question.
You are a newly hired accountant for Sushi Beeber, Inc., a retail company specializing in apparel for small pets. The company would like to expand its apparel line to include sweaters for cats. Sushi Beeber has found several manufacturers that offer competitive prices to ensure cost of goods sold is low. Because the company receives merchandise from different manufacturers and the cat sweaters will be commoditized, the company needs to develop an internal accounting system to keep track of inventory cost. You think that the weighted average cost method may help the company stay up-to-date with the inventory cost as purchase cost changes over time. Your task is to create a spreadsheet that can calculate the inventory cost based on purchases and sales for the month. See attached spreadsheet. nventory Weighted Date Purchase/Sale Total Cost Average Cost 1-Oct Purchase 1-Oct Sale 3-Oct Purchase 4-Oct Sale 4-Oct Sale 4-Oct Purchase 7-Oct Sale…
You are a newly hired accountant for Sushi Beeber, Inc., a retail company specializing in apparel for small pets. The company would like to expand its apparel line to include sweaters for cats. Sushi Beeber has found several manufacturers that offer competitive prices to ensure cost of goods sold is low. Because the company receives merchandise from different manufacturers and the cat sweaters will be commoditized, the company needs to develop an internal accounting system to keep track of inventory cost. You think that the weighted average cost method may help the company stay up-to-date with the inventory cost as purchase cost changes over time. Your task is to create a spreadsheet that can calculate the inventory cost based on purchases and sales for the month. To help you get started, the file already has a list of columns for you to fill out. Row 2 has the beginning inventory. Starting with row 3, you need to fill in each field so that you can find the updated inventory total…
You are a newly hired accountant for Sushi Beeber, Inc., a retail company specializing in apparel for small pets. The company would like to expand its apparel line to include sweaters for cats. Sushi Beeber has found several manufacturers that offer competitive prices to ensure cost of goods sold is low. Because the company receives merchandise from different manufacturers and the cat sweaters will be commoditized, the company needs to develop an internal accounting system to keep track of inventory cost. You think that the weighted average cost method may help the company stay up-to-date with the inventory cost as purchase cost changes over time. Your task is to create a spreadsheet that can calculate the inventory cost based on purchases and sales for the month. See attached spreadsheet.-this has the information you need! The chart below is what I need to fill in. Inventory Weighted Date Purchase/Sale Total Cost Average Cost 1-Oct Purchase 1-Oct Sale 3-Oct…
Second Republic Bank is a lending company that operates in the Southeastern United States. Current economic conditions have kept lending rates low, whichlimits the revenue potential for Second Republic. The bank manager, Vivian Caldwell is concerned about understanding and then controlling costs, and shedecided to try out time-driven ABC. As a pilot, she decided to focus on understanding the cost of taking a customer’s loan application. Vivian knew that it tooklonger to collect applicant information for a mortgage than it did for other types of loans, like auto loans or unsecured loans, but did not know the cost differences,so she collected the following information from a regional branch office.There are two loan application specialists, each earning $112,320 per year. Vivian determined that fringe benefits average 10% of salary and that the officesupport costs for an employee (computer, office space, etc.) in that regional branch averaged $16,848 per employee. Factoring in time off…
Consider the following conversation between Gary Means, manager of a division that produces industrial machinery, and his controller, Donna Simpson, a certified management accountant and certified public accountant: Gary: Donna, we have a real problem. Our operating cash is too low, and we are in desperate need of a loan. As you know, our financial position is marginal, and we need to show as much income as possibleand our assets need bolstering as well. Donna: I understand the problem, but I dont see what can be done at this point. This is the last week of the fiscal year, and it looks like well report income just slightly above breakeven. Gary: I know all this. What we need is some creative accounting. I have an idea that might help us, and I wanted to see if you would go along with it. We have 200 partially finished machines in process, about 20% complete. That compares with the 1,000 units that we completed and sold during the year. When you computed the per-unit cost, you used 1,040 equivalent units, giving us a manufacturing cost of 1,500 per unit. That per-unit cost gives us cost of goods sold equal to 1.5 million and ending work in process worth 60,000. The presence of the work in process gives us a chance to improve our financial position. If we report the units in work in process as 80% complete, this will increase our equivalent units to 1,160. This, in turn, will decrease our unit cost to about 1,345 and cost of goods sold to 1.345 million. The value of our work in process will increase to 215,200. With those financial stats, the loan would be a cinch. Donna: Gary, I dont know. What youre suggesting is risky. It wouldnt take much auditing skill to catch this one. Gary: You dont have to worry about that. The auditors wont be here for at least 6 to 8 more weeks. By that time, we can have those partially completed units completed and sold. I can bury the labor cost by having some of our more loyal workers work overtime for some bonuses. The overtime will never be reported. And, as you know, bonuses come out of the corporate budget and are assigned to overheadnext years overhead. Donna, this will work. If we look good and get the loan to boot, corporate headquarters will treat us well. If we dont do this, we could lose our jobs. Required: 1. Should Donna agree to Garys proposal? Why or why not? To assist in deciding, review the corporate code of ethics standards described in Chapter 1. Do any apply? 2. Assume that Donna refuses to cooperate and that Gary accepts this decision and drops the matter. Does Donna have any obligation to report the divisional managers behavior to a superior? Explain. 3. Assume that Donna refuses to cooperate; however, Gary insists that the changes be made. Now what should she do? What would you do? 4. Suppose that Donna is 63 and that the prospects for employment elsewhere are bleak. Assume again that Gary insists that the changes be made. Donna also knows that his supervisor, the owner of the company, is his father-in-law. Under these circumstances, would your recommendations for Donna differ?
You are an accounting student at Berkeley College and will not graduate for another year. But because of your excellent grades so far, you have been able to land a job in the purchasing department of a retailer. One of the purchasing agents in your company is negotiating for the receipt of a very large order of uninsured goods from a supplier. The purchasing agent is able to get a better deal on the goods if they are shipped FOB shipping point rather than FOB destination. The agent doesn’t know the difference between these two concepts. He also doesn’t understand why choosing one over the other should make any difference to the company. As a student of accounting at Berkeley College, you know well the difference between these 2 concepts and you know why one would be a better choice over the other in the case of uninsured goods. Please explain these two concepts in this discussion and tell the purchasing agent which shipping method is preferable and why.