Question;WK 1;DQ;DQ 1;Paid-In Capital and the Balance Sheet;From Chapter 12, Ethical Issue 12-1. Complete all parts of the case and respond;to at least two of your classmates? postings.;Stan Sewell paid $50,000 for a franchise that;entitled him to market software programs in the countries of the European;Union. Sewell intended to sell individual franchises for the major language;groups of Western Europe?German, French, English, Spanish, and Italian.;Naturally, investors considering buying a franchise from Sewell asked to see;the financial statements of his business.;Believing the value of the franchise to be $500,000;Sewell sought to capitalize his own franchise at $500,000. The law firm of St.;Charles & LaDue helped Sewell form a corporation chartered to issue 500,000;shares of common stock with par value of $1 per share. Attorneys suggested the;following chain of transactions;a. Sewell's;cousin, Bob, borrows $500,000 from a bank and purchases the franchise from;Sewell.;b. Sewell;pays the corporation $500,000 to acquire all its stock.;c. The;corporation buys the franchise from Cousin Bob.;d. Cousin;Bob repays the $500,000 loan to the bank.;In the final analysis, Cousin Bob is debt-free and;out of the picture. Sewell owns all the corporation's stock, and the;corporation owns the franchise. The corporation's balance sheet lists a;franchise acquired at a cost of $500,000. This balance sheet is Sewell's most;valuable marketing tool.;Requirements;What;is unethical about this situation?Who;can be harmed? How can they be harmed? What role does accounting play?;DQ 2;Effects on Retained Earnings and the Income Statement;Discuss cash dividends and stock;dividends. How is each recorded? When each is issued, what is the affect on;assets, liabilities and owner?s equity? Respond to at least two of your classmates?;postings.;Wk 2 DQ;DQ;1 The Statement of Cash Flows;From Chapter 14, Fraud Case 14-1. Complete all parts of the case and respond to;at least two of your classmates? postings by Day 7.;Frank Lou had recently been promoted to construction;manager at a development firm. He was responsible for dealing with contractors;who were bidding on a multi-million dollar excavation job for the new;high-rise. Times were tough, several contractors had gone under recently, and;the ones left standing were viciously competitive. That morning, four bids were;sitting on Frank's desk. The deadline was midnight, and the bids would be;opened the next morning. The first bidder, Bo Freely, was a tough but;personable character that Frank had known for years. Frank had lunch with him;today, and after a few beers, Bo hinted that if Frank ?inadvertently? mentioned;the amount of the lowest bid, he?d receive a ?birthday card? with a gift of;cash. After lunch, Frank carefully unsealed the bids and noticed that another;firm had underbid Bo's company by a small margin. Frank took Bo's bid envelope;wrote the low bid amount in pencil on it, and carried it downstairs where Bo's;son William was waiting. Later that afternoon, a new bid came in from Bo's;company. The next day, Bo's company got the job, and Frank got a birthday card;in his mailbox.;Requirements;1. Was Frank's company hurt in any way by this;fraudulent action?;2. How could this action hurt Frank?;3. How can a business protect against this;kind of fraud?;DQ 2 Financial;Statement Analysis;Discuss what high current ratios;indicate and why are businesses with extremely high current ratios (example;25.0) at risk? Explain what a high accounts receivable turnover indicates to a;business? Respond to at least two of your classmates? postings.;Week 3;DQ 1 Introduction to;Managerial Accounting;From Chapter 16, Ethical Issue 16-1. Complete all parts of the case and respond;to at least two of your classmates? postings.;Becky Knauer recently resigned from;her position as controller for Shamalay Automotive, a small, struggling foreign;car dealer in Upper Saddle River, New Jersey. Becky has just started a new job;as controller for Mueller Imports, a much larger dealer for the same car;manufacturer. Demand for this particular make of car is exploding, and the;manufacturer cannot produce enough to satisfy demand. The manufacturer's;regional sales managers are each given a certain number of cars. Each sales;manager then decides how to divide the cars among the independently owned;dealerships in the region. Because of high demand for these cars, dealerships;all want to receive as many cars as they can from the regional sales manager.;Becky's former employer, Shamalay;Automotive, receives only about 25 cars a month. Consequently, Shamalay was not;very profitable.;Becky is surprised to learn that her;new employer, Mueller Imports, receives over 200 cars a month. Becky soon gets;another surprise. Every couple of months, a local jeweler bills the dealer;$5,000 for ?miscellaneous services.? Franz Mueller, the owner of the;dealership, personally approves payment of these invoices, noting that each;invoice is a ?selling expense.? From casual conversations with a salesperson;Becky learns that Mueller frequently gives Rolex watches to the manufacturer's;regional sales manager and other sales executives. Before talking to anyone;about this, Becky decides to work through her ethical dilemma.;Requirement;1. Put yourself in Becky's place.;a. What;is the ethical issue?;b. What;are your options?;c. What;are the possible consequences?;d. What;should you do?;DQ 2 Job Order and;Process Costing;Manufacturers use three inventory;accounts. Name each one and explain what costs each contain.;Wk;4 DQ;DQ 1 Activity-Based Costing and Other Cost Management Tools;Fraud Case 18-1. Complete all parts of the case and respond to at least two of;your classmates? postings.;Anu Ghai was a new production analyst at RHI, Inc., a;large furniture factory in North Carolina. One of her first jobs was to update;the activity rates for factory production costs. This was normally done once a;year, by analyzing the previous year's actual data, factoring in projected;changes, and calculating a new rate for the coming year. What Anu found was;strange. The activity rate for ?maintenance? had more than doubled in one year;and she was puzzled how that could have happened. When she spoke with Larry;McAfee, the factory manager, she was told to spread the increases out over the;other activity costs to ?smooth out? the trends. She was a bit intimidated by;Larry, an imposing and aggressive man, but she knew something wasn?t quite;right. Then one night she was at a restaurant and overheard a few employees who;worked at RHI talking. They were joking about the work they had done fixing up;Larry's home at the lake last year. Suddenly everything made sense. Larry had;been using factory labor, tools, and supplies to have his lake house renovated;on the weekends. Anu had a distinct feeling that if she went up against Larry;on this issue, she would come out the loser. She decided to look for work;elsewhere.;Requirements;1. Besides spotting irregularities, like the;case above, what are some other ways that ABC cost data are useful for;manufacturing companies?;2. What are some of the other options that Anu;might have considered?;DQ 2 Cost-Volume-Profit;Analysis;Discuss how the following affect the break-even point;Week;5;DQ;1 The Master Budget and Responsibility;Accounting;From Chapter 22, Ethical Issue 22-1. Complete all parts of the case and respond;to at Ethical Issue;22-1;Residence Suites operates a regional hotel chain.;Each hotel is operated by a manager and an assistant manager/controller. Many;of the staff who run the front desk, clean the rooms, and prepare the breakfast;buffet work part-time or have a second job so turnover is high.;Assistant manager/controller Terry Dunn asked the new;bookkeeper to help prepare the hotel's master budget. The master budget is;prepared once a year and is submitted to company headquarters for approval.;Once approved, the master budget is used to evaluate the hotel's performance.;These performance evaluations affect hotel managers? bonuses and they also;affect company decisions on which hotels deserve extra funds for capital;improvements.;When the budget was almost complete, Dunn asked the;bookkeeper to increase amounts budgeted for labor and supplies by 15%. When;asked why, Dunn responded that hotel manager Clay Murry told her to do this;when she began working at the hotel. Murry explained that this budgetary;cushion gave him flexibility in running the hotel. For example, because company;headquarters tightly controls capital improvement funds, Murry can use the;extra money budgeted for labor and supplies to replace broken televisions or;pay ?bonuses? to keep valued employees. Dunn initially accepted this explanation;because she had observed similar behavior at the hotel where she worked;previously.;Requirements;Put yourself in Dunn's position. In deciding how to deal;with the situation, answer the following questions;1. What is the ethical issue?;2. What are my options?;3. What are the possible consequences?;4. What should I do?;DQ 2 Flexible Budgets and Standard Costs;What are the benefits of standard costs?;How do businesses set those;standards?
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