Ask a question
Can't find the answer? Try online tutoring
We have the UK’s best selection of online tutors, when and for how long you need them.
Getting 1-on-1 support is cheaper than you might think.
An economy has four economic phases i.e : Boom, Recession, Slump and Recovery. Boom is sometimes considered to be most preferable and recession all bad. Is it true?
Golf Mart is a retail sports store carrying golf apparel and equipment. The store is at the end of its second year of operation and is struggling. A major problem is that its cost of inventory has continually increased in the past two years. In the first year of operations, the store assigned inventory costs using LIFO. A loan agreement the store has with its bank, its prime source of financing, requires the store to maintain a certain profit margin and current ratio. The store’s owner is currently looking over Golf Mart’s preliminary financial statements for its second year. The numbers are not favorable. The only way the store can meet the required financial ratios agreed on with the bank is to change from LIFO to FIFO. The store originally decided on LIFO because of its tax advantages. The owner recalculates ending inventory using FIFO and submits those numbers and statements to the loan officer at the bank for the required bank review. The owner thankfully reflects on the available latitude in choosing the inventory costing method.
How does Golf Mart’s use of FIFO improve its net profit margin and current ratio? Is the action by Golf Mart’s owner ethical? Explain.
Shares in smartphone maker Blackberry have dived after it reported an $84m (£55m) loss for the three months to 1 June.
The figure was better than the $518m loss for the same period last year, but much worse than analysts' forecasts.
Shipments of new smartphones increased, but Blackberry, which used to be called Research In Motion, did not release how many new handsets running the BB10 operating system were sold in the quarter.
The following is an excerpt from a conversation between the office manager, Mark Cottman and the president of Horowitz Construction Supplies, Co., Rosa Mullin. Horowitz sells building supplies to local contractors.
Mark: Rosa, we’re going to have to do something about these overdue accounts receivable. One-third of our accounts are over 60 days past due, and I’ve had accounts that have stayed open for almost a year!
Rosa: I didn't realize it was that bad. Any ideas?
Mark: Well, we could stop giving credit. Make everyone pay with cash or a credit card. We accept MasterCard and Visa already, but only the walk-in customers use them. Almost all of the contractors put purchases on their bills.
Rosa: Yes, but we've been allowing credit for years. As far as I know, all of our competitors allow contractors credit. If we stopped giving credit, we’d lose many of our contractors. They’d just go elsewhere. You know, some of these guys run up bills as high as $60,000 or $80,000. There's no way they could put that kind of money on a credit card.
Mark: That’s a good point. But we've got to do something.
Rosa: How many of the contractor accounts do you actually end up writing off as uncollectible?
Mark: Not many. Almost all eventually pay. It's just that they take so long!
Suggest one or more solutions to Horowitz Construction Supplies Co.'s problem concerning the collection of accounts receivable.