Solved by verified expert :The Adjusting Process
From Chapter 3, Ethical Issue 3-1.Complete all parts of the case and respond to
at least two of your classmates’ postings.
Ethical
Issue 3-1
The net income of Steinbach &
Sons, a department store, decreased sharply during 2014. Mort Steinbach,
manager of the store, anticipates the need for a bank loan in 2015. Late in
2014, Steinbach instructs the store’s accountant to record a $2,000 sale of
furniture to the Steinbach family, even though the goods will not be shipped
from the manufacturer until January 2015. Steinbach also tells the accountant not
to make the following December 31, 2014, adjusting entries:
Salaries owed to employees $900
Prepaid insurance that has
expired 400
Requirements
1.
Compute the overall effects of these
transactions on the store’s reported income for 2014.
2.
Why is Steinbach taking this action?
Is his action ethical? Give your reason, identifying the parties helped and the
parties harmed by Steinbach’s action. (Challenge)
3. As a personal friend, what advice would
you give the accountant? (Challenge)
Completing the Accounting Cycle
Explain the purpose of adjusting
entries.
How is net income affected if
adjusting entries are not made?
Describe the four closing
entries and explain their purpose.
