Research in motions accounts receivable for fiscal

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shorter period of time; further, this difference is material. Research In Motion’s accounts receivable for fiscal 2009 represent 44.6% ($2,593,742 / $5,812,656) of its current assets and 25.4% ($2,593,742 / $10,204,409) of its total assets. Research In Motion’s receivables are historically high because most sales are made on credit. 4. Solution depends on the annual report information obtained. 8-33 Accounts receivable Net sales
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Chapter 08 - Cash and Internal Controls Comparative Analysis — BTN 8-2 Days’ sales uncollected = x 365 Research In Motion ($ millions) Current Year: $2,594/$14,953 x 365 = 63.32 days Prior Year: $2,112/$11,065 x 365 = 69.67 days Research In Motion’s days’ sales uncollected has decreased by 6.35 days. The percent decrease is: (63.32 - 69.67) / 69.67 = (9.1)% . Apple ($ millions) Current Year: $3,361/$42,905 x 365 = 28.59 days Prior Year: $2,422/$37,491 x 365 = 23.58 days Apple’s days’ sales uncollected has increased by 5.01 days. The percent increase is: (28.59 – 23.58) / 23.58 = 21.2%. Comparative Analysis: Apple’s increase in days’ sales uncollected is 21.2%, which is a marked unfavorable trend compared with Research In Motion’s decrease of 9.1%. That is, Apple has failed to successfully manage the number of days’ sales that are uncollected relative to the prior year. However, it is important to remember that, historically, Apple’s accounts receivable have not been a large asset for this company. 8-34 Accounts receivable Net sales
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Chapter 08 - Cash and Internal Controls Ethics Challenge BTN 8-3 1. In a small business office it is very important that the owner of the business become involved with control and oversight. In this medical office it would greatly enhance the internal control environment if Dr. Conrad reconciles the bank statements. 2. Unfortunately, due to collusion of the employees, the bank reconciliation will not detect this fraud. The cash deposits per the books will reconcile to the cash deposits per the bank. 3. Despite the collusion, the scheme is not foolproof. For example, some ways in which the scheme might be uncovered or prevented include the following: A bank employee may become suspicious and call Dr. Conrad and ask if she is aware that occasionally her employees cash patient checks for cash. An astute patient might notice that his/her statement contains a miscellaneous credit rather than a cash payment notation. If the patient is aware of accounting practices, then Dr. Conrad might be advised. Dr. Conrad might be able to detect the fraud herself if she reviews the daily posting log generated by most computers in that she might see the batch totals for miscellaneous credits are posted at times different from all cash payment credits. Dr. Conrad could require approval for each miscellaneous credit. As a control, Dr. Conrad could require all checks be stamped ‘For Deposit Only’ when they are received. 4. Dr. Conrad should review her salary schedules for employees to make sure that she is at least offering market pay. She may want to consider bonding her employees to insure herself against material losses. Dr.
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