1) Case Study: "Analyzing Allowances and Credit Limits at the State Hotel" Elaine Cook, front office manager of the State Hotel, has been looking through the daily revenue reports for the past week. Posted room revenues are up, but allowances to rooms revenues are up as well. The report citing guests over or near their credit limits has also increased in size. Elaine has been the hotel's front office manager for about three months. She was transferred to the hotel from a resort in another part of the state where she was also the front office manager. The resort had mostly social (or non- group) guests; the State Hotel primarily caters to group business. The State Hotel recently lost several front desk employees to a new property that just opened down the street. Elaine had to hire new employees to take their places. Elaine does not want what she is seeing in the reports to become a trend. The State Hotel has always had a low allowance factor, and has seldom had a problem with credit card collection or direct billing. She has asked Carl Ross, the hotel controller, for help. When they meet to discuss the situation, Carl tells Elaine that the company's auditors are coming within the next month for their annual review. A report from the auditors is sent to the hotel general manager and the corporate office. Discussion Questions a. What sources of information should Elaine look at to determine why allowances have increased? What sources should she look at to determine why the credit limit report has increased? (10 pts) b. Should Elaine discuss these problems with other departments besides accounting? If so, which ones? What other things should Elaine look at within the front office? (10 pts) c. What elements should Elaine include in her action plan to ensure that the issues have been properly addressed before the company auditors arrive? (10 pts)