Question

Tiffany Lyons was just hired as the assistant treasurer of Key West Stores. The company is a specialty chain store with nine retail stores concentrated in one metropolitan area. Among other things, the payment of all invoices is centralized in one of the departments Tiffany will manage. Her primary responsibility is to maintain the company’s high credit rating by paying all bills when due and to take advantage of all cash discounts.

Jay Barnes, the former assistant treasurer who has been promoted to treasurer, is training Tiffany in her new duties. He instructs Tiffany 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,” Jay continues, “we always hold the checks at least 4 days beyond the discount period before mailing them. That way, we get another 4 days of interest on your money. Most of our creditors need our business and don’t complain. And, if they scream about our missing the discount period, we blame it on the mailroom 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 1

Key West stores is known for its credit rating, but on observing the given case details it is evident that the credit raring of key West stores is acquired by unethical means of activities. They write checks and will no deliver it to the suppliers until 4 days. The checks will be dated on due date but will be delivered after 4 days thus saving interest for that 4 days.

They will blame the mail and post for that and will take benefit to increase their credit rating.