What is the effect on income before taxes

Assignment Help Finance Basics

Reference no: EM131520914

Question: You have recently been hired as the assistant controller for Stanton Industries. Your immediate superior is the controller who, in turn, reports to the vice president of finance. The controller has assigned you the task of preparing the year-end adjustments. For receivables, you have prepared an aging of accounts receivable and have applied historical percentages to the balances of each of the age categories. The analysis indicates that an appropriate balance for Allowance for Uncollectible Accounts is $180,000. The existing balance in the allowance account prior to any adjustment is a $20,000 credit balance. After showing your analysis to the controller, he tells you to change the aging category of a large account from over 120 days to current status and to prepare a new invoice to the customer with a revised date that agrees with the new aging category. This will change the required allowance for uncollectible accounts from $180,000 to $135,000. Tactfully, you ask the controller for an explanation for the change and he tells you, "We need the extra income; the bottom line is too low."

Required: 1. What is the effect on income before taxes of the change requested by the controller?

2. Discuss the ethical dilemma you face. Consider your options and responsibilities along with the possible consequences of any action you might take.

Reference no: EM131520914

Questions Cloud

What should be the primary goal of the police : What should be the primary goal of the police and how should police agencies ensure that the goal is met??

Implement the sustainability in an organization : Implementation of Sustainability in an Organization. Evaluates and anticipates risks associated with the investment.

Prepare a letter of application to an organization : Prepare a letter of application to an organization where the job you seek exists. Prepare a resume to include with your letter resume

Where can you enter the conversation : Think about your own experiences using the Internet and reading. Where can you enter "the conversation" with the sources and add experience and a point of view?

What is the effect on income before taxes : You have recently been hired as the assistant controller for Stanton Industries. Your immediate superior is the controller who, in turn, reports.

What type of retailer is netflix : To compete more efficiently with Blockbuster, should Netflix open brick-and-mortar retail stores? Why or why not

What is the amount of net accounts receivable : Obtain a copy of the annual report of Avon Products, Inc., for the most recent year. You can find the annual report at the company's website ( www.avon.com).

Interferences and distortions of messages : In this chapter, we learn that leaders should be able to prevent the interruptions and overcome most of the interferences and distortions of their messages.

How is demand likely to affect dealers willingness : How is demand likely to affect dealers' willingness to negotiate prices with Smart Car buyers? Why is bundle pricing appropriate for the various models of cars

User Account

All Pages