financial Accounting of McKenzie and Associates Accounting Company

Question: Discuss about the McKenzie and Associates Accounting Company. Answer: Thank you for your acceptance and trusting of our professional accounting service. McKenzie and Associates Accounting Company is proud of have you as our esteem customer, we trust that we will continue collaborating as we share both professionalisms in accounting and you excellent success. We are motivated by your response and coming back seeking new advice concerning accounting activities and operations that are relevant to you reputable organization. Therefore, we feel proud and honor to be your trusted accounting adviser. McKenzie and Associates Accounting Company has been in operation for the last ten years providing accounting advice to many companies around the world, what keeps us going on with our services is the fact that those companies are able to implement on our advice and they end up realizing better fruits out of their financial operations. Our main aim is to ensure that we advise our clients based on the financial controls, measures, and process as we respect the poli cies that are stated and inaugurated by the board of director and financial departments. We understand the financial operations and challenges that affect many organization, especially Pewter Ltd. Lack of implementing the stated policies and the financial measure could lead to financial challenges. The role of accounting and finance department to ensure that all policies and measure inaugurated by them and top management are well implemented and utilize in order to reduce and provide solution to the financial fatal financial activities. However, we have it is our role to help the organizational management to eradicate on the measures that are irrelevant to the company. Advice concerning the Warranty expense Warranty is the agreement made to the products by the manufacturer that the repair and replacement of the product will be done without any cost incurred by the consumer; period for warranty is usually stated. It is the responsibility of the manufacturer to state the warranty period and provides the conditions that will be acceptable to repair or replace the products purchased by the consumer. The total of warranty expense is limited by the period of warranty that the business organization is typically allowing. The company normally incurs warranty expenses when sales are made. When the manufacturer makes some sales, it has the obligation to repair and replace the products. It is important for Pewter Ltd to provide warranty services to the clients; this will allow the company to gain trust and loyalty from the customers. Consequently, the company is recommended not to force customers to pay for the shipping and transport cost that will exceed the price of the product. Pewter Ltd is board of management is advice not to enter into extended warranties or service contract, they may force the company to incur a lot of costs, and thus reducing the profitability of the company. AASBs Act 137 states that the company that provides extended services to the client may become bankrupt at its early stage since a lot of costs are incurred to that product, which is not faulty. The act indicates that not all products are breaking on the time covered by the warranty period some clients may demand extra service to the product forcing the company to incur cost that will increase the company expense and liabilities(AASB C.A.S, 2014). The company is advice to describe consumer warranty protection by stating clearly that it provides extended warranty service under the cost paid by the consumers. While striving towards realizing profitability making approaches, Pewter Ltd is advice to recognize the impact of warranty expense to the financial statements. It is important for the company to recognize the all variance expense that contributes to the warranty expense. The current agreement made by the board of management on warranty expense should be revised since it will mislead the company from the recording company general expense, therefore, influencing the profitability approach for the company(Lee Vetter, 2015). Pewter Ltd is advice to recognize all the variance that contribute, the variance warranty expense should be treated as the accrual expense since they accrue before they are released or incurred by the company. The company should record these expenses at the same period when the related product sales are made and recorded by the sales department, this process of recording expense is called the matching principle, where all the expenses relating to sales are recognized during the time of reporting the revenues from the sale transactions(Camilleri, E Camilleri, 2017). The Pewter Ltd Company is advice to specify the number of damages to its products within certain number of days. The company should reasonably estimate the amount of warranty claims that are likely to arise under the policy; the estimated amount should accrue the expense that reflects the anticipated claims. Corporations Act 2001 (Corporations Act) and the Australian Securities and Investments Commission Act 2001 (ASIC Act) contains information that relates to the license of extended warranties to the products manufactured by a company. The act states that companies that provide the extended warranties are providing additional coverage to the existing warranties, and thus incurring high cost compared to the normal warranted limited by the warranty period(Baker, et al., 2017). Advice concerning retail company operations Retail operations are currently considered as the business process that allows the company to increase its profitability making. Companies involved in retail services are in a better position to gain competitive advantage over the specified marketplace. Pewter Ltd Company is advocated to understand the business activities that suits the retail activities; the company is also mandated to estimate the issues that will arise because of involving itself in retail services(Evans Weil, 2017). Competitive advantage to a company is derived from the major business factor that defines the firm success. The business competitive advantage is gained by a business that provides excellence services and products to its clients, it is also gained when the company is able to meet the consumers demands in the market. Retail services are what is considered as the best preference of gaining competitive advantage in the market, retail servicing allows the company to segment its market as it ensures products are well distributed in the market. Pewter Ltd Company is operating in a devised market that every company is operating with an aim of increasing its market share. The company is advice to increase its retailing service within the market, this will allow the company to dominate the supply chain of the product in the market it operates. CORPORATIONS ACT 2001 - SECT 761G state about the retail services to client in relation to the financial products. It is clear that the retailers are primarily creating a platform that links the company and the consumer(Goodman, n.d.) Pewter Ltd Company is mandated to shape the products demand structures in the market by involving its self in retail services. Raggio stated that retailing is also a marketing strategy that needs to be adopted by a business organization. Pewter Ltd Company is recommended to encourage retailers to keep own setting aside more sections that will be used to exhibit different product, this will improve on customer experience. The customer should be allowed to choose and compare the variety of products displayed in one retail shop. However, the company can improve on customer experience by allowing customers to compare their old products with the new one, some customer may prefer to purchase the old product because of some factors such as durability, efficiency, and price. Based on the emailed we receive, the Pewter Ltd Company is encouraged to continue working with the retailers they have entered into agreement with if they can increase the number it could also better. Pewter Ltd Company is advice to state the number of retailers and their areas of operation in relation to the revenue they report to the company at every time they made products sales. Sometimes some of the retailers are just enjoying the exhibition fee they are paid and that they cannot even make target of product sales in each quarter, the payment fee that was to be paid should be treated as an income to the company and not expense. The company is advice to ensure that the $600 fee they pay for exhibition fee reduces the number of the retailers increases this will increase the company revenue. Auditing is an important strategic management approach that allows business organizations to realize their progress in terms of their performance. Pewter Ltd Company has allowed retailers to transfer the revenue to them after deducting the exhibition fee. The company should conduct an audit practice to the stores, this will allow them to realize the sales before the end of quarter. The Pewter Ltd Company is encouraged to recognize sales based on the principles provided by the International Financial Reporting Standards, the principles state that revenues should be recognized when the sales are made. Therefore, the company is recommended to receive revenues at the end of each quarter when the sales have been made and not before sales are made. It is important for the company to understand that recognizing the value of sales at the beginning of each quarter will eventually affect the financial statements of the company. Adjustments to be made when sales are not made are considered as irrelevant approach of recording transactions, adjustments are only recommended when errors and mistakes are found in company records(Gimbar, et al., 2016). However, Pewter Ltd Company is advice not to record all the reversed products with the incoming inventory. The processing cost of both incoming and reversed product is very much different, the processing cost of producing the products may not be same due to critical factor that may occur during the course of the quarter. Pricing of product should also be different, this is due to the processing cost material cost and other relevant costs of product. Retailers acts as the link between the company and the consumers, at the beginning of one-quarter, consumers may decide to purchase the products that were revised on the previous quarter The company should consider agreement with the retailers to implementing the inventory measure such as FIFO and LIFO as they make products sales. These inventory measures allow the retailers to determine the price strategy of selling the products to the consumers. Pewter Ltd Company is advice to consider the price strategy as the primary factor that deter mines the purchasing power of the consumers(Lee Vetter, 2015). Pewter Ltd Company is also encouraged to consider the cost of sales as part of doing business. The exhibition fee of $600 should be treated as cost of doing business since they are incurred before sales are made. The net amount received from the stores should be confirmed by conducting audit practice; this will compare the incoming inventory given to the stores with the sales made as well as unsold products(Dunne, et al., 2013). In conclusion, the company is advocated to implement on advices given since it will allow the company to accomplished its strategic goals and objectives. It is our happiness as McKenzie and Associates Accounting Company to be part of the success, we encourage you to implement on our recommendations as they give the platform of reaching out to the market. We will also recommend that you will respond concerning our advices if any clarification is required. Please do confirm that you receive the later through a phone call and email. References Baker, H. 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