RIHVS Expanded Case.docx - REA Material The Rent-It-Here-Video-Store Case The Rent-It-Here-Video-Store(RIHVS is a single-store video rental business

RIHVS Expanded Case.docx - REA Material The...

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REA Material The Rent-It-Here-Video-Store Case The Rent-It-Here-Video-Store (RIHVS) is a single-store video rental business located in a university town. It is a sole proprietorship, started by the owner after he graduated from the local university with a business degree. He used a $10,000 inheritance as the initial startup capital. There are five employees of RIHVS plus the owner. The owner performs all of the “backroom operations” for the store which include all the development and maintenance of the video inventory and merchandise sold by RIHVS as well as all accounting, human resources, and financing activities. The five employees consist of two managers and three clerks. When employee turnover occurs, applicants complete a job application and are interviewed by the owner who ultimately makes the hire decision. The store is open from 10:00AM to midnight seven days a week. Whenever the store is open, it is staffed by one of the managers or the owner along with at least one clerk. The owner works Monday through Friday mornings when customer traffic is slowest as well as before the store opens. This allows him time to perform the backroom operations while the clerk checks-in and restocks returned videos and contacts customers with overdue items. One of the managers closes the business each night counting the receipts preparing a tally sheet on a prepared form that summarizes the day’s business activities. This form and the receipts are dropped in a night deposit safe in the store’s office. The next morning, the
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  • Spring '14
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