Roy Rogers is the accounting manager at Tire, Inc, a tire manufacturer. He plays golf withthe CEO, who is somewhat of a celebrity in the local community. The CEO would be ableto receive a huge bonus if the company increases net income by the end of the year. Roy,wanting to become part of the elite circle the CEO was in, explained he knows some tricksto increase the company income. This would require revising some journal entries on therent paid on storage units used by the company. Roy changed the rental payments toprepaid rent, allowing the CEO to receive his bonus and the revisions were neverdiscovered.1. By Roy changing the journal entries how did it cause the net income to increaseand the CEO to get his bonus?2. With the change of the journal entries, who gained and who lost?3. What are the consequences of Roys actions if they are discovered?

1 Roy converted the rental costs to prepaid rent. It should be noted that rental expenditure is…

Roy Rogers is the accounting manager at Tire, Inc., a tire manufacturer. He play: the CEO, who is somewhat of a celebrity in the local community. The CEO woule to receive a huge bonus if the company increases net income by the end of the wanting to become part of the elite circle the CEO was in, explained he knows se to increase the company income. This would require revising some journal entrie rent paid on storage units used by the company. Roy changed the rental paymer prepaid rent, allowing the CEO to receive his bonus and the revisions were never discovered.

Roy Rogers is the accounting manager at Tire, Inc., a tire manufacturer. He play: the CEO, who is somewhat of a celebrity in the local community. The CEO woule to receive a huge bonus if the company increases net income by the end of the wanting to become part of the elite circle the CEO was in, explained he knows se to increase the company income. This would require revising some journal entrie rent paid on storage units used by the company. Roy changed the rental paymer prepaid rent, allowing the CEO to receive his bonus and the revisions were never discovered.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Damon Davis was doing the paperwork for Drano Plumbing. He estimated a net profit of $50,000. He discovered that the debit column on the balance sheet totaled $400,000 and the credit column, $300,000, when he added up the columns. What was the difference in the results' most likely cause? What should he do if this wasn't the root of the problem? How can he find out where it came from?
You have recently been hired by Davis & Company, a small public accounting firm. One of the firm’s partners, Alice Davis, has asked you to deal with a disgruntled client, Mr. Sean Pitt, owner of the city’s largest hardware store. Mr. Pitt is applying to a local bank for a substantial loan to remodel his store. The bank requires accrual based financial statements but Mr. Pitt has always kept the company’s records on a cash basis. He does not see the purpose of accrual based statements. His most recent outburst went something like this: “After all, I collect cash from customers, pay my bills in cash, and I am going to pay the bank loan with cash. And, I already show my building and equipment as assets and depreciate them. I just don’t understand the problem.Mr. Pitt has relented and agrees to provide you with the information necessary to convert his cash basis financial statements to accrual basis statements. He provides you with the following transaction information for the fiscal…
Bonanza Ltd. is a consultancy firm. Mr. Prakash Bhalla is a recently qualified CPA who has earlier worked in the auditing, taxation and consultancy side of a reputable professional accounting firm, is the owner of the firm. His firm provides consultancies for accounting and auditing. He has invested on the relevant items to start his business. Besides, he has also bought a car to travel to canvas for clients instead of earlier using public conveyance.Prakash employed one staff. He and his staff cater to small business owners by keeping their books of accounts using Tally ERP 9, a computerized accounting system. On a periodical basis, he forwarded financial reports to his clients and advise them accordingly. He also looks into his clients’ system and offer services like establishing proper costing system and other important management accounting services. Every time he completes a certain project/assignment, he would bill his clients on an adhoc project basis. However, when the proposed…
Ben and Eric are opening a comic bookstore to be registered as E&B Comic Bookstore Co. There is no other competing comic bookstore in the area. Their fundamental decision is how to organize the business and they anticipate a substantial profit in the first year, with the ability to sell franchises in the future. Although they have enough to start the business now as a partnership, cash flow will be an issue as they grow. They feel the corporate form of operation will be best for the long term. They seek your advice.Requirements1. What is the main advantage they gain by selecting a corporate form of business now?2. Distinguish between par value and issue price.3. If they decide to issue $1 par common stock and anticipate an initial market price of $80 per share, how many shares will they need to issue to raise $4,000,000?4. The owners are desirous of comparing serval financial transactions and possible outcomes to assist in guiding their decision-making process. They assume that the…
Derek Dingler conducts corporate training seminars on managerial accounting techniques all around the country. An upcoming training seminar is to be held in Philadelphia. Just prior to that engagement, Derek will be in New York City. He plans to stay in Philadelphia the night of the seminar, as the next morning he plans to meet with clients about future training seminar possibilities. One travel option is to fly from New York to Philadelphia on the first flight on Friday morning, which will get him to Philadelphia two hours before the start of his seminar. The cost of that flight is $287. Uber fees for his time in Philadelphia will cost $68. His meal per diem is $40 for each full day and $25 for each half day. The hotel cost is $225 per night. His second option is to rent a car and drive the two hours to Philadelphia from New York City the afternoon before the seminar. The cost of the rental car including gas is $57 per day and the car will be needed for two full days. At the end of…
Hello, I need help solving this accounting problem.
Ben and Eric are opening a comic bookstore to be registered as E&B Comic Bookstore Co. There is no other competing comic bookstore in the area. Their fundamental decision is how to organize the business and they anticipate a substantial profit in the first year, with the ability to sell franchises in the future. Although they have enough to start the business now as a partnership, cash flow will be an issue as they grow. They feel the corporate form of operation will be best for the long term. They seek your advice. Requirements 1. What is the main advantage they gain by selecting a corporate form of business now? 2. Distinguish between par value and issue price. 3. If they decide to issue $1 par common stock and anticipate an initial market price of $80 per share, how many shares will they need to issue to raise $4,000,000? 4. The owners are desirous of comparing serval financial transactions and possible outcomes to assist in guiding their decision-making process. They assume that…
On March 3, 2016, Zad Company was established to produce and sell plastic products. The company produces a full line of plastic products included customized orders. The Chief Executive Officer of the company is working hard to enhance profitability and liquidity. Recently, you have been hired as the Financial Director of the company. 1. On March 8, 2020, the Chief Financial Officer stated to you that she wishes to reduce the company's investment in current assets since those assets provide little, if any, return to the firm. How would you respond to this statement? 2. On September 17, 2020, the Chief Financial Officer stated to you that as long as the company maintains a positive cash balance, why is it essential to review the firm's cash flows? 3. On January 5, 2021, the Chief Financial Officer wishes to expand the company's operations and are trying to determine the amount of debt financing the company should obtain versus the amount of equity financing that should be raised. The…
Hi! My name is Jessica and I have a income chart I need to fill out but... I don't know where to put anything and I feel like some things are out of place because it isn't balanced. Can you help me?
2. Bridget Youhzi works for a large firm. Her alma mater has asked her to make a presentation to the upcoming accounting honor society’s annual scholarship dinner. Her firm supports the presentation because it hopes to recruit more excellent employees like Bridget. The university is 196 miles from her office. In order to get to the dinner by 5:00 p.m., she will need to leave work at 1:00 p.m. She can drive her personal car and be reimbursed $0.50 per mile. The dinner ends at 9:00 p.m. Company policy allows her to spend the night if the return trip is four hours or more. There is a student-run inn and conference center across the street from campus that charges $101 per night. Instead of driving, she could catch a 3:00 p.m. flight that has a round-trip fare of $300. Flying would require her to rent a car for $39 per day and pay an airport parking fee of $25 for the day. The company pays a per diem of $35 for incidentals if the employee spends at least six hours out of town. (The per…
Analyzing the Accounting Information System of HARDA Fashion. HARDA Fashion sells ready-to-wear fashion clothes to teenagers. The company has a 20-store chain concentrated in the north-eastern part of the United States of America. Each store has the experienced full-time staff consist of a manager and an assistant manager. The full-time staff is paid a fixed salary. The full-time staff is assisted with a cashier and a sales assistant who have comparatively less experience. The cashier and sales assistant are paid hourly wages plus the commission based on the volume of sales. HARDA Fashion uses unsophisticated cash registered with four-parts sales invoice to record each financial transaction. These sales invoices for the sales transaction irrespective of the payment type. The record-keeping starts with the sales assistant on the sales floor. The sales assistant fills the sales invoices manually by providing the following information: 1. Records his or her employee number. 2. Enters the…