Yancy’s Hardware has three stores. Each store manager is paid a salary plus a bonus on the sales made by his or her store. On January 5, 2012, Bill Slick, manager of one of the stores, resigned. Bill’s store had doubled its expected December 2011 sales, producing a bonus for Bill of $8,000 in December alone. Charles Brook, an assistant manager at another store, was assigned as manager of Bill’s store. Upon examination of the store’s accounting records, Charles reports that the store’s records indicated sales returns and allowances of $110,000 in the first four days of January 2012, an amount equal to about half of December 2011 sales.
Required:
1. Conceptual Connection: Explain what the large amount of sales returns and allowances suggest that Bill might have done.
2. Conceptual Connection: Determine how Yancy could protect itself from a manager who behaved as Bill did.