Victor is a chess enthusiast and CEO of ChessPerfect, a company which manufactures chess sets and distributes them across North America. As Victor purchased a majority stake in the business recently and took over the CEO role, he is still seeking some help with fully understanding the business. ChessPerfect produces several types of chess sets from vinyl to titan materials. It has two business units, one vinyl and the premium Titan business unit. Victor has strong manufacturing plants and a great team of management including a general manager, sales manager, production manager and HR manager. He wishes to get advice, amongst other things, on running an ethical business (including accounting-specific elements). In the most recent management meeting, Victor an General Manager, who is patient and open to different viewpoints, "Thank you and we know your views, and we certainly need to see how they hold up over a number of accounting periods, not just one. She placed a paper on the table. "These are the numbers I received this morning- the 2024 numbers are not official yet as they still need to be verified and the data is a bit messy. I haven't had time to make sense of it but take a look here." Cash- year end Operating expenses- annual Accounts payable- year end Sales revenues- annual Accounts receivable- year end 2024 $240,000 1.120.000 46,000 1,720,000 65.000 2023 $330,000 1.240.000 46.000 1.750.000 50,000 2022 $320,000 1.250.000 42.000 1,650,000 45,000 The Sales Manager takes a quick look at the data and says, "I'm not an accountant but it seems to me that there might be a mistake with the numbers which impact profit- either the numbers on the paper are wrong or the ratio calculation is!" Victor weighs what the Sales Manager is saying and quickly interjects with a gesture to the General Manager. "She did mention the numbers haven't been verified yet, but we can dig deeper into that." He makes a quick mental note to confirm how net profit is calculated and if the profit margin ratio makes sense. He wonders if there are other expenses to consider, not just operating expenses. The Production Manager took a quick look at the paper and said, "It seems like our revenues are trending down, which, of course, means lower profits. And remember that we also pay our shareholders as good a dividend as any of our competitors, if not better." Victor recalls that the company paid about 20% of it profits as dividends last year. He has held off on declaring dividends this year, butwants a pros and cons analysis on paying dividends He wonders how the business's cash situation would be affected if the corporation stuck to its usual policy of paying out 20% of profits to shareholders. The company typically waited until supplier bills came due before paying- what if they delayed paying That could certainly help the cash situation, but there could certainly be downsides to an act like that. Victor wants a detailed analysis of this, too. The Sales Manager interjected. "The lower revenues aren't my fault! Customers are not paying quickly and that messes up my numbers!"

invoices on sales revenue and to Seek recommendations on how to entice customers to pay more quickly. He is wondering if there might be drawbacks to requesting quicker payments. "How are union negotiations going?" Victor turned to the Human Resources Manager who had been quiet throughout the meeting S 4 She sighed. "They're going- we should probably project a 10% increase salary expenses next year- they're playing hardball because of the high inflationary environment right now!" Victor chewed his lip and refrained from asking if firing some of the louder employees was a good way to send a message- perhaps that would limit raises to only 5%. As it stood now, he was expecting sales to remain flat next year and operating expenses to increase 8% overall. What would that do to the firm's bottom line? He made another mental note to ask for help with the projection and perhaps his negotiation strategy too Wisely, he steered the conversation in a new direction, turning to the Production Manager. "So, our new premium Titan business unit- how is that going?" He frowned. "We don't have exact profit numbers yet since we get special orders over there and we are having trouble tracking costs of those orders. Victor nodded. "OK, so we need a proper costing system for specific jobs." He had a suspicion that there were issues in the premium Titan department and had planned to ask his cost accountant friend about it, but she was away on a vacation at the moment. Victor would need to seek help elsewhere- the business was getting a lot of special orders and tracking and recording costs of each order accurately was imperative. Specifically, he needed advice on allocating manufacturing overhead costs and making journal entries- detailed examples of both would really help.