Ethical Issue Case Summary: Company G has borrowed $100,000 from a bank for expansion. The bank has put a condition that Company G should maintain a current ratio of 1.50. Business is not great for Company G, and as a result of the expansion the current ratio is down to 1.40. To save the situation, R the owner is contemplating to record revenue of $10,000 in December, even though it would be earned in next January, as the contract for the job is signed. To Journalize: The revenue transaction, and indicate how this will affect the current ratio.

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Answer 1

Question

Chapter 4, Problem 4.1CTEI

1.

To determine

Ethical Issue

Case Summary: Company G has borrowed $100,000 from a bank for expansion. The bank has put a condition that Company G should maintain a current ratio of 1.50. Business is not great for Company G, and as a result of the expansion the current ratio is down to 1.40. To save the situation, R the owner is contemplating to record revenue of $10,000 in December, even though it would be earned in next January, as the contract for the job is signed.

To Journalize: The revenue transaction, and indicate how this will affect the current ratio.

2.

To determine

To Discuss: If it is ethical to record the revenue transaction in December, and identify the accounting principle being violated by this.

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Answer 2

Question

Chapter 4, Problem 4.1CTEI

1.

To determine

Ethical Issue

Case Summary: Company G has borrowed $100,000 from a bank for expansion. The bank has put a condition that Company G should maintain a current ratio of 1.50. Business is not great for Company G, and as a result of the expansion the current ratio is down to 1.40. To save the situation, R the owner is contemplating to record revenue of $10,000 in December, even though it would be earned in next January, as the contract for the job is signed.

To Journalize: The revenue transaction, and indicate how this will affect the current ratio.

2.

To determine

To Discuss: If it is ethical to record the revenue transaction in December, and identify the accounting principle being violated by this.

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Answer 3

Question

Chapter 4, Problem 4.1CTEI

1.

To determine

Ethical Issue

Case Summary: Company G has borrowed $100,000 from a bank for expansion. The bank has put a condition that Company G should maintain a current ratio of 1.50. Business is not great for Company G, and as a result of the expansion the current ratio is down to 1.40. To save the situation, R the owner is contemplating to record revenue of $10,000 in December, even though it would be earned in next January, as the contract for the job is signed.

To Journalize: The revenue transaction, and indicate how this will affect the current ratio.

2.

To determine

To Discuss: If it is ethical to record the revenue transaction in December, and identify the accounting principle being violated by this.

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Answer 4

Question

Chapter 4, Problem 4.1CTEI

1.

To determine

Ethical Issue

Case Summary: Company G has borrowed $100,000 from a bank for expansion. The bank has put a condition that Company G should maintain a current ratio of 1.50. Business is not great for Company G, and as a result of the expansion the current ratio is down to 1.40. To save the situation, R the owner is contemplating to record revenue of $10,000 in December, even though it would be earned in next January, as the contract for the job is signed.

To Journalize: The revenue transaction, and indicate how this will affect the current ratio.

2.

To determine

To Discuss: If it is ethical to record the revenue transaction in December, and identify the accounting principle being violated by this.

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Answer 5

Chapter 4, Problem 4.1CTEI

1.

To determine

Ethical Issue

Case Summary: Company G has borrowed $100,000 from a bank for expansion. The bank has put a condition that Company G should maintain a current ratio of 1.50. Business is not great for Company G, and as a result of the expansion the current ratio is down to 1.40. To save the situation, R the owner is contemplating to record revenue of $10,000 in December, even though it would be earned in next January, as the contract for the job is signed.

To Journalize: The revenue transaction, and indicate how this will affect the current ratio.

2.

To determine

To Discuss: If it is ethical to record the revenue transaction in December, and identify the accounting principle being violated by this.

Answer 6

Chapter 4, Problem 4.1CTEI

1.

To determine

Ethical Issue

Case Summary: Company G has borrowed $100,000 from a bank for expansion. The bank has put a condition that Company G should maintain a current ratio of 1.50. Business is not great for Company G, and as a result of the expansion the current ratio is down to 1.40. To save the situation, R the owner is contemplating to record revenue of $10,000 in December, even though it would be earned in next January, as the contract for the job is signed.

To Journalize: The revenue transaction, and indicate how this will affect the current ratio.

Answer 7

Chapter 4, Problem 4.1CTEI

1.

To determine

Ethical Issue

Case Summary: Company G has borrowed $100,000 from a bank for expansion. The bank has put a condition that Company G should maintain a current ratio of 1.50. Business is not great for Company G, and as a result of the expansion the current ratio is down to 1.40. To save the situation, R the owner is contemplating to record revenue of $10,000 in December, even though it would be earned in next January, as the contract for the job is signed.

To Journalize: The revenue transaction, and indicate how this will affect the current ratio.

Answer 8

2.

To determine

To Discuss: If it is ethical to record the revenue transaction in December, and identify the accounting principle being violated by this.

Answer 9

2.

To determine

To Discuss: If it is ethical to record the revenue transaction in December, and identify the accounting principle being violated by this.

Answer 10

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To Discuss: If it is ethical to record the revenue transaction in December, and identify the accounting principle being violated by this.

Chapter 4 Solutions