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In: Operations Management

One of the major problems with front office accounting at the Royal Crest Hotel is monitoring...

One of the major problems with front office accounting at the Royal Crest Hotel is monitoring guest and non-guest accounts using their manual system. Management has always extended local businesses and government officials charge privileges, the idea being that, with the convenience of deferred payments, local patrons would be more likely to dine and/or host clients at the hotel. This program has proved to be highly successful. The volume of purchases charged to such non-guest accounts now approximates the level of sales incurred by registered guests. Unsure if this is a good or bad situation, Mr. Osei, the front office manager, requests the front office accounting staff to study the problem and to report its findings at next week's front office meeting. At the weekly front office meeting, the hotel's accountant, Ms. Pokua, reports that there are at least three problems related to the hotel's non- guest charge purchasing policies: its impact on the daily hotel audit, the billing procedures to collect payment, and the number of applications for additional non-guest accounts. When asked to be more specific, she begins with a review of the daily hotel audit. She states that since the front office receives charge vouchers from the hotel's revenue centers, it is the front desk agent's responsibility to separate guest from non-guest accounts. Since registered guest charges are posted by room number, one would think it easy to sort those charges from the others. Unfortunately, both the hotel's guest account numbers and the non-guest account numbers are three digits, thereby making the sorting more time-consuming. Mr. Osei asks if it is really necessary to separate the charges. Ms. Pokua explains that it is, since the hotel must maintain accurate guest folio Page 2 of 1 G. N. Baah balances. She further states that the non-guest vouchers are accumulated and posted on Saturday afternoons, when the hotel's business is less hectic. The billing procedures to collect non-guest account balances are tricky, Ms. Pokua said. Since the hotel bills non-guest accounts on the last day of each month, some charges occurring in a particular month may not be posted in time to appear on that month's bill. In addition, non-guest accounts usually are not paid in time. In fact, 47 percent of last month's non-guest account balances remain unpaid and tomorrow is the date of the next billing cycle. Mr. Osei explains that the local customers are important to the hotel and suggests that maybe Ms. Pokua is over-sensitive to the billing problems. Lastly, Ms. Pokua relates the fact that there are at least ten new applications for non-guest accounts. She has instructed her staff not to authorize any new non-guest accounts without her written approval. She further states that she is reluctant to authorize any additional non-guest accounts, and looks to Mr. Osei for advice. Convinced of the positive aspects of such business, Mr. Osei directs her to approve the requests and to assign account numbers effective the first day of next month. Ms. Pokua so instructs her staff. a. What ideas (any two) would you suggest to facilitate a more effective processing of guest and non- guest charge vouchers? b. How might the daily audit be aided by such changes? c. Is the accumulated-postings routine for non-guest accounts an effective plan? Explain your response. d. What could be done to improve the hotel's billing of non-guest accounts? e. What could be done to improve collection of outstanding balances? State any four (4). f. What are the two (2) advantages and two (2) disadvantages to having a high volume of non- guest accounts? NOTE; PLEASE I NEED DIFFERENT ANSWERS.

Solutions

Expert Solution

ANS a) THE FOLLOWING ARE THE IDEAS :

  • THE GUEST AND NON GUEST CHARGE VOUCHERS SHOULD BE SEPERATED
  • THEY SHOULD HAVE DIFFERENT PATTERN OF ACCOUNT NUMBERS LIKE THREE DIGIT FOR GUESTS AND MORE THEN THRE DIGIT OR ALPHA NUMERIC FOR NON GUESTS
  • NON-GUETS SHOULD BE BOUND BY TIME TO PAY
  • NEW NON GUESTS SHOULD BE APPRPVED WITH THE PERMISSION OF THE ACCOUNTANT
  • AGENCIES CAN BE APPOINTED TO HANDLE THE CHARGE VOUCHERS.

ANS b) WITH THE CHANGES THE BILLING CYCLE WILL BE CONTROLLED. THE BILLS OF NON-GUESTS WHICH DIDNOT APPEAR IN THE MONTH'S BILL WILL BE RECORDED IN TIME THEREFORE ACCOUNTS WOULD BE MANAGEABLE AND AUDITABLE.

ANS C) NO THE ACCUMULATED POSTING ROUTINE IS NOT GOOD BECAUSE SOME CHARGES THAT OCCUR IN THE MONTH ARE NOT POSTED IN THAT MONTH WHICH SHOULD HAVE POSTED TO APPEAR IN THE MONTH'S BILL. ANOTHER THING IS THAT THE NON GUEST ACCOUNTS ARE RARELY PAID IN TIME. THEREFORE THE BILLS SHOULD BE UPDATED IN TIME SO THAT ALL THE CHARGES ARE INCLUDED IN IT.

ANS D) TO IMPROVE THE BILLING OF NON GUEST ACCOUNTS, AGENCIES CAN BE APPOINTED TO HANDLE THE CHARGE VOUCHERS, THE GUEST AND NON GUEST CHARGE VOUCHERS SHOULD BE SEPERATED. THEY SHOULD HAVE DIFFERENT PATTERN OF ACCOUNT NUMBERS LIKE THREE DIGIT FOR GUESTS AND MORE THEN THRE DIGIT OR ALPHA NUMERIC FOR NON GUESTS.


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