Ethical Case Study Case Summary: The manufacturing company C rented out their excess warehouse space to a local company in lease. The entire lease amount was received on the day, the lease was signed. So the company reports a huge amount of unearned rent in its balance sheet . While preparing the adjusted trial balance at the end of the accounting period, the chief accountant Mr. C noticed a significant decline in the earnings of the company and reported it to the CFO. The CFO instructed him to pass an adjusting entry for unearned rent (as rent revenue), as they have received the full cash, and have the right to recognize the revenue for the company in the current period. With lots of dilemma in his mind finally Mr. C passed the adjusting entry. To explain: If Mr. C is behaving ethically or not?

Question

Covered member’s independence is impaired with respect to an attest client. What is a covered member for a CPA? What are the sources of liability for an auditor who violates the rules of professional conduct in an audit engagement?

Answer 1

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 3, Problem 3.1CP

1.

To determine

Ethical Case Study

Case Summary:

The manufacturing company C rented out their excess warehouse space to a local company in lease. The entire lease amount was received on the day, the lease was signed. So the company reports a huge amount of unearned rent in its balance sheet. While preparing the adjusted trial balance at the end of the accounting period, the chief accountant Mr. C noticed a significant decline in the earnings of the company and reported it to the CFO. The CFO instructed him to pass an adjusting entry for unearned rent (as rent revenue), as they have received the full cash, and have the right to recognize the revenue for the company in the current period. With lots of dilemma in his mind finally Mr. C passed the adjusting entry.

To explain: If Mr. C is behaving ethically or not?

2.

To determine

The parties affected by C’s decision

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Covered member’s independence is impaired with respect to an attest client. What is a covered member for a CPA? What are the sources of liability for an auditor who violates the rules of professional conduct in an audit engagement?

Monty Inc., a major retailer of high-end office furniture, operates several stores and is a publicly traded company. The company is currently preparing its statement of cash flows. The comparative statement of financial position and income stetement for Monty as at May 31, 2020, are as The rollowing is additional Informacon soous transectons cunne tie year shoes may sa, coat for Monty ancy which tohows arks. Plant assets costing $69,000 were purchased by paying $47,000 in cash and issuing 5,000 common shares. In order to supplement is casn, Monty Issued ,000 edditone common snares. Cash dividends of $35,000 were declared and paid at the end of the fiscal year create cashflow direct method statement

Bonita Industries reports the following ledger account balances at June 30, 2025: Cash $1158 Accounts receivable 2838 Inventory 3384 Prepaid rent 104 Equipment 320 Accumulated depreciation-equipment 66 Accounts payable 920 Unearned rent revenue 144 Common stock 220 Retained earnings 6740 Service revenue 392 Interest revenue 80 Salaries and wages expense 200 Insurance expense 98 Assuming that all of the accounts have normal balances, what are total credits on the company's trial balance at June 30, 2025? A. $8562. B. $8586. C. $8496. D. $8482.

Answer 2

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 3, Problem 3.1CP

1.

To determine

Ethical Case Study

Case Summary:

The manufacturing company C rented out their excess warehouse space to a local company in lease. The entire lease amount was received on the day, the lease was signed. So the company reports a huge amount of unearned rent in its balance sheet. While preparing the adjusted trial balance at the end of the accounting period, the chief accountant Mr. C noticed a significant decline in the earnings of the company and reported it to the CFO. The CFO instructed him to pass an adjusting entry for unearned rent (as rent revenue), as they have received the full cash, and have the right to recognize the revenue for the company in the current period. With lots of dilemma in his mind finally Mr. C passed the adjusting entry.

To explain: If Mr. C is behaving ethically or not?

2.

To determine

The parties affected by C’s decision

Expert Solution & Answer

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See solution

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Answer 3

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 3, Problem 3.1CP

1.

To determine

Ethical Case Study

Case Summary:

The manufacturing company C rented out their excess warehouse space to a local company in lease. The entire lease amount was received on the day, the lease was signed. So the company reports a huge amount of unearned rent in its balance sheet. While preparing the adjusted trial balance at the end of the accounting period, the chief accountant Mr. C noticed a significant decline in the earnings of the company and reported it to the CFO. The CFO instructed him to pass an adjusting entry for unearned rent (as rent revenue), as they have received the full cash, and have the right to recognize the revenue for the company in the current period. With lots of dilemma in his mind finally Mr. C passed the adjusting entry.

To explain: If Mr. C is behaving ethically or not?

2.

To determine

The parties affected by C’s decision

Expert Solution & Answer

Trending nowThis is a popular solution!

See solution

Check out sample textbook solution

Answer 4

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 3, Problem 3.1CP

1.

To determine