Andrea2008
Nov 29, 2007, 09:46 AM
Can someone help me with this Ethic Cases, I need to write one or two paragraph for each one. Thank you!
o It should consist of:
Correct action to be taken
Explanation of why
Ethical Case Study 1
Bob Jones has a small business called BJ’s Stuff. He would like to apply for a small business loan from his bank. In order to apply for the loan, he must supply current financial statements to the bank. Upon review of his financial statements, Bob found the following problems:
1. Assets were too LOW in comparison to Liabilities and Equity.
2. Income Statement shows a loss due to high expenses in the past year.
After careful review, Bob decided to correct these problems on the financial statements. First, he plans to contribute personal assets to the business to increase the asset balances. Second, he plans to show sales on account that did not occur, thus increasing the net income on the income statement.
Discuss any ethical concerns you may have with the two plans. Should businesses dress up their financial statements?
Ethical Case Study 2
Mattie Lassi is the manager of Joy Stores. She has been employed by the company for 8 years and 4 years as the manager. She applied for the job of District Manager but was denied the promotion.
Upset over her failure to get promoted, Mattie decided to herself the salary increased that she did not receive. She created a fictitious employee at her store and forwarded the payroll information to the company headquarters. When the payroll checks arrived, Mattie would cash the employee’s check at the register and keep the cash.
While Mattie’s actions are unethical, were they justified given that he was again denied a promotion? Will she be caught? Did the company’s proper internal control system lead to this problem?
Ethical Case Study 3
Ace and Jake own a retail shop called AJ’s Bikes. Over the past five years, the shop had reported its inventory under the LIFO method. In their year end review, Ace and Jake were concerned about their high cost of goods sold and low gross profit. Since they wanted to obtain financing to purchase additional stores, the low profit margin concerned them. Ace, who had taken some accounting classes in college, remember that if the shop used the FIFO method of inventory valuation, they could record a higher gross profit.
Can Ace and Jake change to the FIFO method of inventory from LIFO? Are any ethical issues involved?
Ethical Case Study 4
Omni Corporation’s Board of Directors met over growing concern about the drop in the price of their stock. The company had seen a 25% price drop in the past six months. Since the price was so low, the Board decided to purchase a large bulk of stock for $50 million. Just before the end of the year, the stock increased dramatically and the corporation was able to sell this stock for a gain of $30 million dollars.
At the Board of Director’s meeting to review the year-end financial statements, they were concerned that the gain on the sale of the stock was not reported on the income statement. They believed that since the stock was sold at a price higher than its purchase price, a gain should be recorded on the financial statements.
Did the accountant record the transaction correctly? Why would the Board of Directors want to show the gain? Are there any ethical issues involved? What is the correct journal entry for the sale of the stock?
o It should consist of:
Correct action to be taken
Explanation of why
Ethical Case Study 1
Bob Jones has a small business called BJ’s Stuff. He would like to apply for a small business loan from his bank. In order to apply for the loan, he must supply current financial statements to the bank. Upon review of his financial statements, Bob found the following problems:
1. Assets were too LOW in comparison to Liabilities and Equity.
2. Income Statement shows a loss due to high expenses in the past year.
After careful review, Bob decided to correct these problems on the financial statements. First, he plans to contribute personal assets to the business to increase the asset balances. Second, he plans to show sales on account that did not occur, thus increasing the net income on the income statement.
Discuss any ethical concerns you may have with the two plans. Should businesses dress up their financial statements?
Ethical Case Study 2
Mattie Lassi is the manager of Joy Stores. She has been employed by the company for 8 years and 4 years as the manager. She applied for the job of District Manager but was denied the promotion.
Upset over her failure to get promoted, Mattie decided to herself the salary increased that she did not receive. She created a fictitious employee at her store and forwarded the payroll information to the company headquarters. When the payroll checks arrived, Mattie would cash the employee’s check at the register and keep the cash.
While Mattie’s actions are unethical, were they justified given that he was again denied a promotion? Will she be caught? Did the company’s proper internal control system lead to this problem?
Ethical Case Study 3
Ace and Jake own a retail shop called AJ’s Bikes. Over the past five years, the shop had reported its inventory under the LIFO method. In their year end review, Ace and Jake were concerned about their high cost of goods sold and low gross profit. Since they wanted to obtain financing to purchase additional stores, the low profit margin concerned them. Ace, who had taken some accounting classes in college, remember that if the shop used the FIFO method of inventory valuation, they could record a higher gross profit.
Can Ace and Jake change to the FIFO method of inventory from LIFO? Are any ethical issues involved?
Ethical Case Study 4
Omni Corporation’s Board of Directors met over growing concern about the drop in the price of their stock. The company had seen a 25% price drop in the past six months. Since the price was so low, the Board decided to purchase a large bulk of stock for $50 million. Just before the end of the year, the stock increased dramatically and the corporation was able to sell this stock for a gain of $30 million dollars.
At the Board of Director’s meeting to review the year-end financial statements, they were concerned that the gain on the sale of the stock was not reported on the income statement. They believed that since the stock was sold at a price higher than its purchase price, a gain should be recorded on the financial statements.
Did the accountant record the transaction correctly? Why would the Board of Directors want to show the gain? Are there any ethical issues involved? What is the correct journal entry for the sale of the stock?