special chain hotels

Question 1.
Rita Pelzer was just hired as Assistant Controller of a Hotel, the company is a special
chain hotels with nine hotels concentrated in one metropolitan area. Among other thigs
the payment of invoices is centralized. Her primary responsibility is to maintain the
hotels high credit rating by paying all bills when due and to take advantage of all cash
discounts.
Jamie Caterino , the former Assistant Controller who has ben promoted to Controller, is
training Rita in her new duties. He instructs her that she is to continue the practice of
preparing all checks "net of discount" and dating the checks the last day of the discount
period. But-James continues- we always hold the checks at least four days beyond the
discount period before mailing them out. That way we get another four days of interest
on our money. Most of the creditors need our business and don't complain. And if they
scream about our missing the discount period, we blame it n the mail room or the post
office. We've only lost one discount out of every hundred we take that way. I think
everybody does it. By the way, welcome to our team!
Answer following Questions:
1. What are the ethical considerations in this case?
2. Who are the stakeholders that are harmed or benefited in this situation?
3.  should Rita continue the practice started by Jamie? does she have a choice?

Question 2.
Company's annual report usually will identify the inventory method used. Knowing that
you can analyze the effects of the inventory method on the income statement and the
balance sheet.
-Visit following website:
www.darden.com (Links to an external site.)
1. from Darden restaurants' home page , choose Investor relations
2. Chose Financial Information
3. Choose Annual reports and select 2006-HTML version
4. Select Financial review under the Table of Contents
5. Click on Consolidated Balance Sheet

Answer following questions based on 2006 Annual Report

1. At Darden's financial year end, what was the net inventory on the balance sheet
2. How was  this changed from the previous fiscal year
3. What inventory method does Darden use (see notes to Consolidated Financial
Statements)

Question 3.
Harry Smith owns and manages Harry's restaurant a twenty-four-hour restaurant near
the City's Medical Complex. Harry employs nine full-time employees and sixteen part-
time employees. He pays all full time employees by check, the amounts of which are
determined by Harry's public Accountant, Pam Web. Harry pays all his part time
employees in cash. He computes their wages and withdraws the cash directly from his
cash register.
Pam has repeatedly urged Harry to pay all employees by check. But as Harry has told
his competitor and friend Steve Hill, who owns the Greasy Dinner, "First of all, my part
time employees prefer the cash over a check; and second , I don't withhold or pay any
taxes or work men's  compensation insurance on those wages because they go to
totally unrecorded and unnoticed."

Answer following Questions:
1 Who are the stakeholders in this situation
2.  what are the legal and ethical considerations regarding Harry's handling of his
payroll?
3. Pam Web is aware of Harry's payment of the part time payroll in cash. What are her
ethical responsibilities in this case?
4. what internal control principle is violated in this payroll process.