As assistant controller for a small consulting firm, you are responsible for recording and posting the...
As assistant controller for a small consulting firm, you are
responsible for recording and posting the daily cash receipts and
disbursements to the ledger accounts. After you have posted the
entries, your boss, the controller, prepares a trial balance and
the financial statements. You make the following entries on June
30, 2010:
2010
June 30
Cash 1,430
Accounts Receivable 1,950
Service Revenue 3,380
To record daily cash receipts.
June 30
Advertising Expense 12,500
Utilities Expense 22,600
Rent Expense 24,000
Salary and Wage Expense 17,400
Cash 76,500
To record daily cash disbursements.
The daily cash disbursements are much larger on June 30 than on any
other day because many of the company's major bills are paid on the
last day of the month. After you have recorded these two
transactions and before you have posted them to the ledger
accounts, your boss comes to you with the following request:
As you are aware, the first half of the year has been a tough one
for the consulting industry and for our business in particular.
With first-half bonuses based on net income, I am wondering whether
you or I will get a bonus this time around. However, I have a
suggestion that should allow us to receive something for our hard
work and at the same time not hurt anyone. Go ahead and post the
June 30 cash
receipts to the ledger, but don't bother to post that day's cash
disbursements. Even though the treasurer writes the checks on the
last day of the month and you normally journalize the transaction
on the same day, it is silly to bother posting the entry to the
ledger since it takes at least a week for the checks to clear the
bank.
Assume the position of the assistant controller for the
consulting firm described in that case. You have recorded the
transactions described but have not posted them to the ledger.
Because of the state of the business, your boss has requested that
if you post the cash receipts but NOT the case disbursements,
you’ll have a better chance of getting a bonus.
What is the ethical dilemma posed in this situation?
Do you think this violates the principles of good accounting? Why or why not?
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Credit
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Accounts Receivable
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Supplies
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Equipment
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