You have recently been hired as the assistant controller for Stanton Industrie

    You have recently been hired as the assistant controller for Stanton Industries a large publicly held manufacturing company. Your immediate superior is the
    controller who in turn is responsible to the vice president of finance.

    The controller has assigned you the task of preparing the year-end adjusting entries. In the receivables area you have prepared an aging of accounts
    receivable and have applied historical percentages to the balances of each of the age categories. The analysis indicates that an appropriate balance for the
    allowance for uncollectible accounts is $180000. The existing balance in the allowance account prior to any adjusting entry is a $20000 credit balance.

    After showing your analysis to the controller he tells you to change the aging category of a large account from over 120 days to current status and to prepare
    a new invoice to the customer with a revised date that agrees with the new aging category. This will change the required allowance for uncollectible accounts
    from $180000 to $135000. Tactfully you ask the controller for an explanation for the change and he tells you %u201CWe need the extra income the bottom line
    is too low.%u201D

    1.

    What is the effect on income before taxes of the change requested by the controller?

    2.

    Discuss the ethical dilemma you face. Consider your options and responsibilities along with the possible consequences of any action you might
    take.

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