As the end of Petit Company’s fiscal year approached, it became clear that the company had considerable excess inventory. Ronald Morel, the head of marketing and sales, ordered salespeople to “add 20%

more units to each order that you ship. The customers can always ship the extra back next period if they decide they don’t want it. We’ve got to do it to meet this year’s sales goal.” Discuss the accounting implications of Ronald’s action.

AppendixLO1