As assistant controller for a small consulting firm, you are responsible for recording and posting..
- September 24, 2021/ Finance
As assistant controller for a small consulting firm, you are
responsible for recording and posting the daily cash receipts and disbursements
to the ledger accounts. After you have posted the entries, your boss, the
controller, prepares a trial balance and the financial statements. You make the
following entries on June 30:
The daily cash disbursements are much larger on June 30 than
on any other day because many of the company’s major bills are paid on the last
day of the month. After you have recorded these two transactions and before you
have posted them to the ledger accounts, your boss comes to you with the
As you are aware, the first half of
the year has been a tough one for the consulting industry and for our business
in particular. With first-half bonuses based on net income, I am wondering
whether you or I will get a bonus this time around. However, I have a
suggestion that should allow us to receive something for our hard work and at
the same time not hurt anyone. Go ahead and post the June 30 cash receipts to
the ledger, but don’t bother to post that day’s cash disbursements. Even though
the treasurer writes the checks on the last day of the month and you normally
journalize the transaction on the same day, it is silly to bother posting the
entry to the ledger since it takes at least a week for the checks to clear the
Required Use the Ethical Decision Framework in Exhibit 1-9
to complete the following requirements:
1. Recognize an ethical dilemma: Explain why the
controller’s request will result in an increase in net income. On the basis of
your answer, what ethical dilemma(s) do you now face?
2. Analyze the key elements in the situation:
a. Do you agree with the controller
that the omission of the journal entry on June 30 ‘‘will not hurt anyone’’? Who
may benefit from the omission of the entry? Who may be harmed?
b. How are they likely to benefit or
c. What rights or claims may be
d. What specific interests are in
e. What are your responsibilities
3. List alternatives and evaluate the impact of each on
those affected: As assistant controller, what are your options in dealing with
the ethical dilemma(s) you identified in (1) above? Which provides stockholders
and other outsiders with information that is most relevant, most complete, most
neutral, and most free from error?
4. Select the best alternative: Among the alternatives,
which one would you select? Explain why.