1 The main problem is that Morris Mart Inc.

is a small company with only Mary handling a large part of the business. With a small company like this they do not have enough people to separate the tasks and duties to prevent errors that may occur on the accounts. Having more then one individual handle the company would ensure no mistakes are made on the accounts. Having just Mary do all the work would make it hard for her to concentrate on the accounts and may cause problems due to the lack of help. 2

In order to improve internal control I would hire more workers. In order for everything to be done effeciently another employee may be hired to control the mailing invoices and opening mail. Mary should just concentrate on the accounts and recording the amount billed and recording the payment. 3 I would first explain to Mary what internal control is. I would tell her it is a system "necessary to ensure the safeguarding of an entity's assets, the reliability of its accounting records, and the accomplishment of its overall objectives" (Porter and Norton, 2009). I would then let her know that having her do all the work does not ensure everything would get done correctly. I would let her know she does a great job but needs help in order to concentrate more on one aspect of the company, in this case the accounts recievable.

1
Accounts Receivable Turnover = Net credit Sales / Average Accounts Receivable Coca-Cola: Net Sales Average Accounts Receivable Accounts Receivable Turnover PepsiCo Net Sales Average Accounts Receivable Accounts Receivable Turnover

$24,088.00 $2,434.00 9.90

$35,137.00 $3,493.00 10.06

2
Average Collection Period = Days / Accounts Receivable Turnover Using 360 Day Year Coca-Cola: Days Accounts Receivable Turnover Average Collection Period PepsiCo Days Accounts Receivable Turnover Average Collection Period

360 9.9 36.4

360 10.06 35.8

Both these companies show an average collection period that is reasonable. This shows that both companies have collection periods that are not to slow or to fast.

3
Both companies seem to be performing at a similar rate. From our accounts receivable turnover rate we can see that PepsiCo is slightly ahead of Coca-Cola. When we look just at the Average Collection Period we can see that both are at the same pace. It takes both roughly 36 days to recieive thier collectables. In order to fully determine how thses companies are perfoming we need to also look at the previous years turnover rates and collections periods. It would also help to look at other companies within this industry for thier rates and compare to them.

ble turnover rate we can ollection Period we can ollectables. In order to revious years turnover is industry for thier rates

1 Stegner, Inc. Statement of Cash Flows For Year Ended December 31, 2008 Net Income Adjustments Increase in accounts receivable Decrease in notes receivable Cash flows from operating activities Cash, December 31, 2007 Cash, December 31, 2008 $130,000.00 -$140,000.00 $5,000.00 -$135,000.00 -$5,000.00 $110,000.00 $105,000.00

2 To: Owner of Stegner, Inc. From: Shivani Patel, Accountant Date: December 16, 2011 Re: Statement of Cash Flows For Year Ended December 31, 2008 The main reason that we show a loss in cash this year is because we have a larger accounts receivable. This accounts receivable has not yet been collected showing a lower cash then the previous year. We had a $10,000 decrease in cash flows due to the net income being $130,000 and our Accounts Receivable being $140,000. Out Notes recivable was at $5,000 totalling our decrease to $5,000.