At the end of the current month, Ross Heimlich prepared a trial balance for Main Street Motor Co. The credit side of the trial balance exceeds the debit side by a significant amount. Ross has decided to add the difference to the balance of the miscellaneous expense account in order to complete the preparation of the current month's financial statements by a 5 o'clock deadline. Ross will look for the difference next week when he has more time. Discuss whether Ross is behaving in a professional manner.

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Ruth Harbin opened Macaw Real Estate Co. on January 1, 2005. At the end of the first year, the business needed additional capital. On behalf of Macaw Real Estate, Ruth applied to First City Bank for a loan of $120,000. Based on Macaw Real Estate's financial statements, which had been prepared on a cash basis, the First City Bank loan officer rejected the loan as too risky. After receiving the rejection notice, Ruth instructed her accountant to prepare the financial statements on an accrual basis. These statements included $41,500 in accounts receivable and $13,200 in accounts payable. Ruth then instructed her accountant to record an additional $12,500 of accounts receivable for commissions on property for which a contract had been signed on December 28, 2005, but which would not be formally "closed" and the title transferred until January 20, 2006. Ruth then applied for a $120,000 loan from Second National Bank, using the revised financial statements. On this application, Ruth indicated that she had not previously been rejected for credit. Discuss the ethical and professional conduct of Ruth Harbin in applying for the loan from Second National Bank.

Lighthouse Co. is a graphics arts design consulting firm. Robin Dover, its treasurer and vice president of finance, has prepared a classified balance sheet as of July 31, 2006, the end of its fiscal year. This balance sheet will be submitted with Lighthouse's loan application to Central Trust & Savings Bank. In the Current Assets section of the balance sheet, Robin reported an $80,000 receivable from Ron Knoll, the president of Lighthouse, as a trade account receivable. Ron borrowed the money from Lighthouse in February 2005 for a down payment on a new home. He has orally assured Robin that he will pay off the account receivable within the next year. Robin reported the $80,000 in the same manner on the preceding year's balance sheet. Evaluate whether it is acceptable for Robin Dover to prepare the July 31, 2006 balance sheet in the manner indicated above.

On December 1, 2006, Cardinal Company, a garden retailer, purchased $20,000 of corn seed, terms 2/10, n/30, from Iowa Farm Co. Even though the discount period had expired, Sandi Kurtz subtracted the discount of $400 when she processed the documents for payment on December 15, 2006. Discuss whether Sandi Kurtz behaved in a professional manner by subtracting the discount, even though the discount period had expired.

The company was not entitled to the discount so the company has to pay the full price. By not recognizing the full price the sales discount will be overstated and the Cash account will be overstated as well, which means that your balance sheet will be overstated.

You just have to think what the correct journal entry will be and what the incorrect journal entry was to figure out the affects of the incorrect journal entry and you need to know what accounting priciples were violated in order to fully answer this type of question.