The net income of Adkin's, a department store, decreased sharply during 1995. Mark Adkin, owner of the store, anticipates the need for a bank loan in 1996. Late in 1995 he instructed the accountant to record a \(\$ 2,600\) sale of furniture to the Adkin family, even though the goods will not be shipped from the manufacturer until January 1996. Adkin also told the accountant not to make the following December 31, 1995, adjusting entries:

\section*{Required}
1. Compute the overall effect of these transactions on the store's reported income for 1995.
2. Why did Adkin take this action? Is this action ethical? Give your reason, identifying the parties helped and the parties harmed by Adkin's action.
3. As a personal friend, what advice would you give the accountant?

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Salaries owed to employees. Prepaid insurance that has expired... $1,800 530