Accounting Information Systems: LBR Case $-$ Purchase Process Activity

DATA MODEL $($REA$)$ EXERCISE

Laguna Beach RENTALS $($Purchase$/$

Acquisition Cycle$)$

Laguna Beach Rentals $($LBR$)$ rents vacation homes on or near the ocean in Laguna Beach and the

surrounding area to vacationers from all over the world. This case describes part of the acquisitions

cycle $($how they contract with homeowners for the vacation houses that they ultimately rent to

vacationers$).$

LBR deals primarily with waterfront and water view homes in Southern Orange County and Laguna

Beach, in particular. LBR offers its inventory of homes as short$-$term rentals to vacationers from around

the world. First, however, LBR needs to negotiate contracts with the homeowners. LBR employees, who

are called LBR$-$agents, contract with the homeowners to acquire LBR$$s house inventory. Those owners

interested in offering their houses as short$-$term vacation rentals contact LBR$.$ LBR$-$agents $$ former

marketing majors that are renowned for their fast$-$talking and flamboyant lifestyles$$negotiate the

terms of the contract with the house owners. After negotiating the terms, the LBR$-$agent signs the

contract with the house owner. Contracts for individual properties, which are identified by their unique

street address in LBR$$s system, last $12$ to $36$ months, but sometimes, LBR$-$agents negotiate new

contracts with the owners at the end of that period $($so there would be multiple contracts for one house

over time$).$ Some house owners offer several houses to LBR$.$ Contracts automatically expire if the owner

sells the house, but LBR then attempts to negotiate a contract with the new owner.

LBR tracks its houses by neighborhood. LBR assigns one specific LBR$-$agent to each neighborhood to

negotiate contracts for all houses in that neighborhood, but each LBR$-$agent may be assigned to multiple

neighborhoods.

LBR enters information on each house into the database after the contract is signed; however, they

enter information on neighborhoods into the database as soon as they decide to acquire houses in that

neighborhood in the future.

Normally, LBR contracts specify that payments to the owners depend on the amounts that LBR is able

to rent the properties for. The owners usually receive $85\%$ of the rental amounts $($but that percentage

is negotiable$)$ and LBR keeps the rest. LBR$-$cashiers process the payments to the owners. When multiple

payments are due to the same owner during the same month $($because LBR has contracted for more

than one property from that person$),$ cashiers simply disburse one check for the combined payment.

LBR$-$cashiers are much more restrained than the flamboyant LBR$-$agents who revel in their ability to

wheel and deal in high value real estate. LBR$-$cashiers are bonded for security purposes, and cashiers

never become agents $($or vice$-$versa$),$ so LBR tracks LBR$-$cashiers separately from LBR$-$agents.

All payments to the house owners are made by checks drawn from company bank accounts. The check

numbers are unique.

REQUIRED: $1)$ use the information below and the list of attributes at the end $($no additions$)$ to draw one

REA diagram for each part showing the classes, associations, and multiplicities $2)$ prepare a data

dictionary for each part listing the tables necessary to support Laguna Beach Rentals rental processes

using all the attributes $($name each table, underline the primary key, and place an asterisk by each

foreign key$).$

Attributes

agent employee#

agent name

agent real estate license status

bank account #

bank account balance

cashier bonding status

cashier employee#

cashier name

check #

check date

disbursement $ amount

Pool $($Y$/$N$)$

house street address

house zip code

contract #

contract date

contract duration

contract percentage to owner

neighborhood name

number of bedrooms

owner ID#

number of houses contracted in this

neighborhood

owner name