The net income of Steinbach & Sons, a department store, decreased sharply during 2011. Mort Steinbach, owner of the store, anticipates the need for a bank loan in 2012. Late in 2011, Steinbach instructs the store's accountant to record a $2,000 sale of furniture to the Steinbach family, even though the goods will not be shipped from the manufacturer until January 2012. Steinbach also tells the accountant not to make the following December 31, 2011 adjusting entries:
Salaries owned to employees... $900
Prepaid insurance that has expired... 400
Why is Steinbach taking this action? Is his action ethical? Give your reason, identifying the parties helped and the parties harmed by Steinbach's action. And as a personal friend, what advice would you give the accountant?
