Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

THQ #1 UNIVERSITY SLUM-LORD (USL) does business by leasing single-family homes, minimizing the upkeep on them, and then renting them to students who attend

image text in transcribedimage text in transcribed

image text in transcribedimage text in transcribedimage text in transcribed

THQ #1 UNIVERSITY SLUM-LORD (USL) does business by leasing single-family homes, minimizing the upkeep on them, and then renting them to students who attend college in the same city. The paragraphs below describe part of the acquisitions cycle for USL. USL only deals in single-family houses in its home city, never in multiple unit dwellings. All of its "homes away from home" are houses leased from their present owners by USL employees who are called SL-agents. Lease contracts negotiated by these agents always deal with just one house, and the leases may last 3-5 years. All houses are in the same city and have unique street addresses. Every house is also given a single neighborhood designation by USL depending upon where it is located. Sample neighborhoods are "Walden," "Pembroke" ' 'the Heights" (few USL houses), and "the Depths" (many USL houses). Those houses not associated with a traditional neighborhood are given a designation of either "downtown" or the "outskirts," depending upon their location distance from the center of the city. Information on houses is not entered into the database until a lease for them has been contracted; however, information on neighborhoods is entered into the database as soon as USL determines that a new one exists (such as would happen when on a new subdivision is being built). USL determines its ultimate rental rates to its student customers by considering such matters as lot-size and number-of-bedrooms for each house, so it tracks data like that carefully. Additionally, each house is given a monthly rental surcharge which depends solely upon its neighborhood designation. These monthly surcharges range from very high (The Heights) to very low (The Depths), but every house has one associated with it, and all houses in a particular neighborhood have the same surcharge. Many USL lessors own multiple houses which they lease to the company, but each house has only one owner. Payments to owners are not handled by SL-agents, but by cashiers who are actually a much duller class of employees than the flamboyant agents who revel in their ability to wheel and deal real estate at the expense of both owners and students. Cashiers are bonded for security purposes, and cashiers never become agents (or vice- versa). Payments to lessors are done by checks which are drawn from company cash accounts. The check numbers used from each account are unique to that account, but they do duplicate across accounts (for example, there can be a check #100 drawn from account A-12 and another check #100 draw-n from account A-16). There are some USL cash accounts from which checks are never ywitten. Checks are also used to discharge other obligation of the company, such as advertising and taxes. Checks are sent to lessors on a schedule determined by one of three lease payment options that are negotiated by the agents: (1) each month, (2) every six months, and (3) every year. Most leases do not require any kind of a payment at contract signing time. When multiple lease payments are due to the same lessor during the same month (because USL is leasing more than one property from that person), cashiers simply disburse one check. Information concerning both employees and lessors is put into the database as soon as it is known without waiting for any transactions to take place.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Accounting Volume 1

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Irene M. Wiecek, Bruce J. McConomy

12th Canadian edition

119-49633-5, 1119496497, 1119496330, 978-1119496496

More Books

Students also viewed these Accounting questions

Question

An improvement in the exchange of information in negotiations.

Answered: 1 week ago