Anton Blair is the manager of a medium-size company. A few years ago, Blair persuaded the owner to base a part of his compensation on the net income the company earns each year. Each December he estimates year-end financial figures in anticipation of the bonus he will receive. If the bonus is not as high as he would like, he offers several recommendations to the accountant for year-end adjustments. One of his favorite recommendations is for the controller to reduce the estimate of doubtful accounts. Any sources used to support your answers below should be cited using APA Style.
2. Obviously this action is a violation of ethics. Estimation of Doubtful Accounts are based on accounting standards and philosophies. According to the Matching concept of accounting , all corresponding expenses pertaining to the income shall be matched and reported in the same year in which such income is earned. Thus the revenues earned but not likely to be realised is reported as a bad debts in the same year in which the revenues are earned. The allowance is based on estimate. This estimation of bad debts is based on experience with historical data. Any violation of these concepts and principles is unethical. Reducing allowance for bad debts will end up having heavy write offs in the subsequent years and thus company have to push the recognition of expense to later years.
2. Obviously this action is a violation of ethics. Estimation of Doubtful Accounts are based on accounting standards and philosophies. According to the Matching concept of accounting , all corresponding expenses pertaining to the income shall be matched and reported in the same year in which such income is earned. Thus the revenues earned but not likely to be realised is reported as a bad debts in the same year in which the revenues are earned. The allowance is based on estimate. This estimation of bad debts is based on experience with historical data. Any violation of these concepts and principles is unethical. Reducing allowance for bad debts will end up having heavy write offs in the subsequent years and thus company have to push the recognition of expense to later years.
3.Internal controls may include,
Anton Blair is the manager of a medium-size company. A few years ago, Blair persuaded the...
Anton Blair is the manager of a medium-size company. A few years ago, Blair persuaded the owner to base a part of his compensation on the net income the company earns each year. Each December he estimates year-end financial figures in anticipation of the bonus he will receive. If the bonus is not as high as he would like, he offers several recommendations to the accountant for year-end adjustments. One of his favorite recommendations is for the controller to reduce...
Anton Blair is the manager of a medium-size company. A few years ago, Blair persuaded the owner to base a part of his compensation on the net income the company earns each year. Each December he estimates year-end financial figures in anticipation of the bonus he will receive. If the bonus is not as high as he would like, he offers several recommendations to the accountant for year-end adjustments. One of his favorite recommendations is for the controller to reduce...
[Post First Discussion] Chapter 7 Post S Instructor - Lead Question Anton Blair is the manager of a medium-size company. A few years ago, Blair persuaded the owner to base a part of his compensation on the net income the company earns each year. Each December he estimates year-end financial figures in anticipation of the bonus he will receive. If the bonus is not as high as he would like, he offers several recommendations to the accountant for year- end...
kelly steinman is the manager of a medium-size company. A few years ago, Steinman persuaded the owner to base a part of her compensation on the net profit the company earns each year. BTN 9-3 BTN 9-3 Kelly Steinman is the manager of a medium-size company. A few years ago, Steinman persuaded the owner to base a part of her compensation on the net profit the company earns each year. Each December she estimates year-end financial figures in anticipation of...
Becky Smith is the manager of a wholesale food company. Her compensation, in part, is incentive-based. In other words, the higher the company income, the higher her incentive compensation. Each year, in an effort to influence her bonus, Becky makes several recommendations, concerning adjusting entries, to the company controller. One of her favorites is to ask the controller to reduce the estimate of doubtful accounts. 1. How does lowering the estimate of doubtful accounts affect the income statement and balance...
Mike Lynch is the manager of an upstate New York regional office for an insurance company. As the regional manager, his compensation package comprises a base salary, commissions, and a bonus when the region sells new policies in excess of its quota. Mike has been under enormous pressure lately, stemming largely from two factors. First, he is experiencing a mounting personal debt due to a family member's illness. Second, compounding his worries, the region's sales of new policies have dipped...
Lee Werner is general manager of United Salons. During 2018, Werner worked for the company all year at a $14,200 monthly salary. He also earned a year-end bonus equal to 10% of his annual salary. Werner's federal income tax withheld during 2018 was $1,420 per month, plus $1,704 on his bonus check. State income tax withheld came to $160 per month, plus $50 on the bonus. FICA tax was withheld on the annual earnings. Werner authorized the following payroll deductions:...
Operations Brony’s Bikes was incorporated more than 30 years ago to manufacture ten-speed touring bikes. An exercise bike and mountain bikes later added to the product line. Currently, the company manufactures the following products: Grand Prix: Ten-speed touring bike Phoenix: Deluxe eighteen-speed racing bike Pike’s Peak: Twelve-speed mountain bike Himalaya: Eighteen-speed deluxe mountain bike Waistliner: Stationary exercise bike All of these products are manufactured in a single facility, which is located in eastern Texas. Derailleurs (front and rear) comprise a...
2019 Audit of Beta Industries: Summary Information Assume you are an audit manager, today is May 15, 2019, and your public accounting firm is currently planning the 2019 financial statement audit of Beta Home Goods, a retailer in the home goods and supply industry. Beta is a public company with a 12/31 year-end, and a new client for your firm. The audit partner has asked you to help plan the audit for this new client using the following information obtained...
THE COMPANY: MORE POWER, INC. More Power, Inc., is a large, local retail store specializing in the sale and service of hardware, tools, lawn and garden implements, and other materials for the home. More Power operates seven days a week, dawn to dusk. Approximately 120 employees work in distinct divisions within the store, including customer service/return desk; warehouse and delivery; service and repair; and three distinct sections focused on (1) hardware and tools, (2) lawn and garden and outdoors, and...