Just For Feet

Question 0

Despite rising profits what was a major red flag on Just For Feet’s income statement

Answer 0

Company’s operating cashflows were negative

Question 1

Controversial accounting practice of company’s store opening costs

Answer 1

Amortized the opening cost over 12 months instead of expensing
Them

Question 2

What did just for feet do in April of 1999 to address the negative cashflows that posed a huge liquidity problem for the company?

Answer 2

Sold $200 million of high yield junk bonds

Question 3

What happened in 1999?

Answer 3

Ruttenburg resigned as CEO

company filed for bankruptcy in November

Question 4

3 facets of managements fraudulent scheme for Just For Feet

Answer 4

1 improperly recognizing unearned and fictitious receivables
From vendors
2 failing to properly account for excess inventory
3 improperly recording as income the value of display booths
Provided by vendors

Question 5

Allowance receivables of vendors

Answer 5

Just for Feet was aggressive in front loading vendor allowance
Receivables

Question 6

Fraudulent scheme by Ruttenburgs son

Answer 6

Wanted vendors to provide false sale confirmations to the

Company’s auditor Deloitte

Question 7

Booth income and booth assets

Answer 7

Non existent items recorded In journal entries