11. The following information is taken from Reagan Company's December 31 balance sheet:

Cash and cash equivalents	$	9,819
Accounts receivable		77,422
Merchandise inventories		67,362
Prepaid expenses		5,500
Accounts payable	$	16,350
Notes payable		93,638
Other current liabilities		10,900

If net sales for the current year were $604,500, the firm's days' sales uncollected for the year is: (Use 365 days a year.)

Multiple Choice

• 78.5 days

• 40.7 days

• 68.3 days

• 46.7 days

• 158.7 days

8. You were provided with an article in the Chapter 6 materials that told the story about Rita Crundwell, the former Comptroller of Dixon, Illinois. Rita stole $54 million from the municipality during her twenty years of employment with the city. It was the largest municipal fraud in U.S. history, and went undetected for so long because the city had weak internal controls over financial accounting. The fraud occurred because internal controls were lacking, and because city officials and auditors executed poor oversight. Which of the following was NOT a red flag that the city could be a victim of fraud? Consider what you've learned about internal controls and the elements necessary for human fraud to occur.

Multiple Choice

• Rita led a lavish lifestyle, and appeared to be wildly successful, even though her salary was only $80,000. She owned several homes, and had 400 horses. It was rumored that her family was very wealthy.

• Rita was sweet as pie, and if something needed to get done, shed do it.

• Rita was able to receive, sign and deposit checks. She also prepared the bank reconciliations and was authorized to transfer money between accounts.

• Rita provided believable excuses when city officials asked questions about the financial shortfalls that occurred year after year. City officials trusted her, and did not independently verify her story.