What are the ethical considerations George Green faces as a result of the recent events?
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
#5_Issue: During the last week of 2017, George Green, controller of We ‘R’ Appliances, received a memorandum from the firm’s president, Jane Anderson. The memorandum stated that Anderson had negotiated a very large sale with a new customer and directed Green to see that the order was processed and the goods shipped before the end of the year. Anderson noted that she had to depart from the usual credit terms of n/30 and allow terms of n/60 to clinch the sale. Although the credit terms were unusual for the company, Green was particularly pleased with the news because business had been somewhat slow. The goods were shipped on December 29 and the sale was incorporated into the 2017 financial data.
It is now mid-February 2018, and two events have occurred recently that, together, cause concern for Green. First, he was inadvertently copied on a letter from the firm’s bank to Anderson. The letter stated that the bank had reconsidered its decision to deny a loan to the company and is now granting the loan based on the new, and favorable, sales data supplied by the president. The bank was “particularly impressed with the sales improvement shown in December.” Although Green had been involved in the initial loan application that was denied, he had been unaware that the president had reapplied for the loan.
The second event was that all of the goods shipped on December 29, 2017, to the new customer had just been returned
Questions to be Answered:
- What are the ethical considerations George Green faces as a result of the recent events?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
