Crescent City Fun Park (Crescent City), an amusement park with thrilling rides and a water park, sells tickets onsite and has a website that allows customers to purchase tickets in advance and bypass the long lines. Customers who use the website include the general public and travel agents. Both individuals and travel agents can purchase tickets online using a major credit card. Some travel agents prefer the option of using the website to purchase tickets, but rather than pay with a credit card, be billed at the end of each month. To use the billing option, a travel agent must contact a sales agent with Crescent City and complete a detailed application with at least two references. Once an application is complete, the sales manager verifies the information, contacts the references, and either approves or denies the application. If the application is approved, the sales manager decides on a credit limit for the travel agent. Terms of payment for all travel agent customers is 30 days from the invoice date.

The auditor performs tests of controls on the credit-granting process and gathers sufficient appropriate audit evidence to conclude that the process is working effectively. Credit is only granted after a thorough credit check. However, Crescent City has continual problems collecting from the larger travel agents within the 30-day period. Some of the largest travel agents regularly take 90 or more days to pay an invoice. Crescent City allows this late payment habit to continue simply because of the volume of business generated by the large travel agents. Crescent City has 398 travel agents as customers, with 42 of them representing 81% of accounts receivable.

a. Recommend which customers should be selected for further testing and why.

b. Explain when the testing of accounts receivable would take place and why.

Crescent City Fun Park (Crescent City), an amusement park with thrilling rides and a water park, sells tickets onsite and has a website that allows customers to purchase tickets in advance and bypass the long lines. Customers who use the website include the general public and travel agents. Both individuals and travel agents can purchase tickets online using a major credit card. Some travel agents prefer the option of using the website to purchase tickets, but rather than pay with a credit card, be billed at the end of each month. To use the billing option, a travel agent must contact a sales agent with Crescent City and complete a detailed application with at least two references. Once an application is complete, the sales manager verifies the information, contacts the references, and either approves or denies the application. If the application is approved, the sales manager decides on a credit limit for the travel agent. Terms of payment for all travel agent customers is 30 days from the invoice date.

The auditor performs tests of controls on the credit-granting process and gathers sufficient appropriate audit evidence to conclude that the process is working effectively. Credit is only granted after a thorough credit check. However, Crescent City has continual problems collecting from the larger travel agents within the 30-day period. Some of the largest travel agents regularly take 90 or more days to pay an invoice. Crescent City allows this late payment habit to continue simply because of the volume of business generated by the large travel agents. Crescent City has 398 travel agents as customers, with 42 of them representing 81% of accounts receivable.

a. Recommend which customers should be selected for further testing and why.

b. Explain when the testing of accounts receivable would take place and why.

An usher at a movie theater claims no more than half of all movie theater customers buy something at the refreshment stand. To test the claim, the usher observes a random sample of 80 people and finds that 47 of them buy something.

a) What is the Null Hypothesis and the Alternative Hypothesis for the usher's claim?

b) If we use a 0.01 significance level, what is the critical value for the test?

c) Calculate the value of the test statistic.

d) What is your decision about the null hypothesis and your conclusion about usher’s claim?

e) Calculate the p-value for this test.

Magical Elves Theater

Magical Elves Theater is located in the Brooklyn Mall. A cashier’s booth is located near the entrance to the theater. Three cashiers are employed. One works from 1–5 p.m., another from 5–9 p.m. The shifts are rotated among the three cashiers. The cashiers receive cash from customers and operate a machine that ejects serially numbered tickets. The rolls of tickets are inserted and locked into the machine by the theater manager at the beginning of each cashier’s shift.

After purchasing a ticket, the customer takes the ticket to an usher stationed at the entrance of the theater lobby some 60 feet from the cashier’s booth. The usher tears the ticket in half, admits the customer, and returns the ticket stub to the customer. The other half of the ticket is dropped into a locked box by the usher.

At the end of each cashier’s shift, the theater manager removes the ticket rolls from the machine and makes a cash count. The cash count sheet is initialed by the cashier. At the end of the day, the manager deposits the receipts in total in a bank night deposit vault located in the mall. The manager also sends copies of the deposit slip and the initialed cash count sheets to the theater company treasurer for verification and to the company’s accounting department. Receipts from the first shift are stored in a safe located in the manager’s office.

Required:

1. Identify the measures in place to make sure that the cash receipt transactions are properly accounted for.
2. If the usher and cashier decide to collaborate to misappropriate/steal cash, what actions might they take?

Hasagama Middle School

Hasagama Middle School wants to raise money for a new sound system for its auditorium. The primary fund-raising event is a dance at which the famous disc jockey D.J. Rivet will play classic and not-so-classic dance tunes. Will Schuester, the music and theater instructor, has been given the responsibility for coordinating the fund-raising efforts. This is Will’s first experience with fund-raising. He decides to put the eighth-grade choir in charge of the event; he will be a relatively passive observer.

Will had 500 unnumbered tickets printed for the dance. He left the tickets in a box on his desk and told the choir students to take as many tickets as they thought they could sell for $5 each. In order to ensure that no extra tickets would be floating around, he told them to dispose of any unsold tickets. When the students received payment for the tickets, they were to bring the cash back to Will and he would put it in a locked box in his desk drawer. Some of the students were responsible for decorating the gymnasium for the dance. Will gave each of them a key to the money box and told them that if they took money out to purchase materials, they should put a note in the box saying how much they took and what it was used for. After 2 weeks the money box appeared to be getting full, so Will asked Luke Gilmor to count the money, prepare a deposit slip, and deposit the money in a bank account Will had opened.

The day of the dance, Will wrote a check from the account to pay the DJ. D.J. Rivet, however, said that he accepted only cash and did not give receipts. So Will took $200 out of the cash box and gave it to D.J. At the dance Will had Mel Harris working at the entrance to the gymnasium, collecting tickets from students, and selling tickets to those who had not prepurchased them. Will estimated that 400 students attended the dance.

The following day Will closed out the bank account, which had $250 in it, and gave that amount plus the $180 in the cash box to Principal Foran. Principal Foran seemed surprised that, after generating roughly $2,000 in sales, the dance netted only $430 in cash. Will did not know how to respond.

Required: Identify as many cash control weaknesses/ improper handling of cash as you can in this scenario, and suggest how each can be addressed.

1. A recruiter, Joey Falcon, interviews 6 students. Each student has a probability of 0.2 of receiving a recommendation from Joey Falcon (the result from each student is independent from the results of the other students). Let X be the number students who Joey Falcon recommends.

A second recruiter, Sophie Secaucus, interviews 4 students (different from the above 6 students). Each student has a probability of 0.3 of receiving a recommendation from Sophie Secaucus (the result from each student is independent from the results of the other students. Let Y be the number of students who Sophie Secaucus recommends.

1. Find the joint pmf for X,Y (assume X and Y are independent).
2. Find p(X<3, Y<2)
3. Find p(X+Y<5)

1. Joe estimated the heritability of conception rate in his heifers and it was much higher than he expected at 0.25. Joe’s brother estimated the heritability of conception rate at his farm and it was much lower at 0.03. Both brothers knew that heritability varied by population but they still didn’t understand why there values were so different. What could have Joe don at his ranch to increase the heritability over the estimated heritability of his brother? (3 pts)

2. If Jan was raising ducks,

(a) What is the repeatability of the number of goslings hatched in a nest if the phenotypic variance was 0.3 and the producing ability variance was 0.2? (1 pt)

(b) If the average number of goslings hatched in a nest was 6 and Jan’s goose had 8 goslings in her nest, what would her producing ability be? (1 pt)

2. The accompanying data table show the percentage of tax returns filed electronically in a city from 2000 to 2009. Complete the parts below.

Year   Percentage
2000   27
2001   29
2002   35
2003   42
2004   45
2005   49
2006   55
2007   59
2008   61
2009   67

​b) Calculate the MAD for the forecast in part a. ​(Round to two decimal places as​ needed.)

​d) Calculate the MAD for the forecast in part c (Round to two decimal places as​ needed.)

The Oko-Cocoa Corporation's equity has a beta of 1.4. Its debt has a beta of 0.2. Its debt/equity (D/E) ratio is 0.3. The Johnson Corporation's equity has a beta of 2. The company has zero beta debt, and its debt/equity ratio is 0.5. The risk free rate is 8%, and the expected return on the market portfolio is 19%. There are no taxes.

(a) The Johnson Corporation is thinking of investing in the same line of business that OkaCocoa is engaged in. What discount rate should it use?

(b) Now suppose the Johnson Corporation has decided to invest in projects of this type. These projects now constitute 10% of the overall value of the Johnson Corporation. Given that its debt/equity ratio and the beta of its debt remain unchanged, what will the beta of Johnson's equity be now?