The Gardner Company, a client of your firm, has come to you with the following problem. It has three clerical employees who must

perform the following functions: a. Maintain the general ledger b. Maintain the accounts payable ledger c. Maintain the accounts receivable ledger d. Prepare checks for signature e. Maintain the cash disbursements journal f. Issue credits on returns and allowances g. Reconcile the bank account h. Handle and deposit cash receipts Assuming equal abilities among the three employees, the company asks you to assign the eight functions to them to maximize internal control. Assume that these employees will perform no accounting functions other than the ones listed. 227CHAPTER 7 CONTROL AND ACCOUNTING INFORMATION SYSTEMS REQUIRED a. List four possible unsatisfactory pairings of the functions. b. State how you would distribute the functions among the three employees. Assume that with the exception of the nominal jobs of the bank reconciliation and the issuance of credits on returns and allowances, all functions require an equal amount of time. (CPA Examination, adapted)

Business

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The operations manager for a local bus company wants to decide whether he should purchase a small, medium, or large new bus for

Scilla [3833]

Answer:

a) the small bus

b) the medium or large bus

c) the small bus

Explanation:

a) using the maximin criterion, the manager aims to maximize the least possible profit (a pessimistic approach), which results in the following profits:

Bus size Demand

Low Medium High

Small 50 60 70 → minimum profit = 50

Medium 40 80 90 → minimum profit = 40

Large 20 50 120 → minimum profit = 20

Thus, the optimal choice yielding the highest minimum profit is the small bus.

b) applying the maximin criterion, the manager will seek to minimize potential maximum losses, determining losses based on the best profit scenario:

Bus size Demand

Low Medium High

Small 0 -20 -50 → maximum loss = -50

Medium -10 0 -30 → maximum loss = -30

Large -30 -30 0 → maximum loss = -30

Hence, the option that bears the least maximum loss is either the medium or large bus.

c) for calculating the expected value of each option:

small = 30/100*50 + 30/100*60 + 40/100*70 = 61

medium = 30/100*40 + 30/100*80 + 40/100*90 = 72

large = 30/100*20 + 30/100*50 + 40/100*120 = 69

The small bus turns out to be the best choice, as it has the highest expected profit.

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E11-8 (Algo) Reporting Stockholders' Equity LO11-1, 11-3, 11-7 Abe's Steakhouse is the largest upscale steakhouse company in the

soldi70 [3635]

Answer:

Shareholders' equity current year last year

Common stock: $235,563.56 $234,053.56

Capital over par value: $192,389,000.00 $170,431,000.00

Retained earnings: -$33,352,000.00 -$80,797,000.00

Total shareholders' equity $159,272,563.56 $89,868,053.56

last year's common stocks = 23,405,356 x $0.01 = $234,053.56

current year's common stocks = 23,563,356 x $0.01 = $235,563.56

last year's capital over par value = $170,431,000

current year's capital over par value = $192,389,000

last year's retained earnings = -$80,797,000.00

current year's retained earnings = -$80,797,000 + $54,583,000 - $7,138,000 = ($33,352,000.00)

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