Assume that you are employed by a law firm as a staff accountant. The firm has purchased four season tickets for the Colorado Rockies (a baseball franchise).

Your boss, one of the partners in the firm, has offered individual tickets to you, but also asked you to pay $10 for each ticket. Since they are $14 tickets, you are happy to get a bargain. You are even happier to get a chance to go to the game because tickets are in short supply.

Next month, while reviewing the financial statements for your department, you are unable to find the $40 of cash receipts for these tickets. Since you know that the firm has purchased these tickets, you wonder what happened to your $40 payment. After discussing this matter with several other junior staff members who had also paid the partner for tickets to Rockies’games, you guess that the partner has pocketed the money and not reported the revenue to the other partners.

Required

a. What should or would you do? Why?

b. Would it make any difference if the firm were a single proprietorship and not a partnership? Why?

c. Would it make any difference if all the partners followed the same procedure and pocketed the ticket money? Why?

d. Is this an issue that should be reported to any other parties such as the Internal Revenue Service, the State Auditor, or the Attorney General? Why? p-968