Ethical Issue: The net income of Steinbach and Sons, a landscaping business, decreased sharply duing 2017. Mort Steinbach, owner and manager of the company, anticipates the need for a bank loan or to sell stock to bring in additional cash to operate the business in 2016. Late in 2017, Steinbach instructs the company's accountant to record $2,000 of revenues for landscaping services for the Steinbachs family even though the services will not be performed until January 2018. Steinbach also tells the accountant NOT to make the following December 31st adjusting entries:

Salaries owed to employees $900

Prepaid insurance that has expired $400

Requirements

: 1- Compute the overall effects of these transactions on the company's reported net income for 2017.

2- Why is Steinbach taking this action? Is this action ethical?

3- As a personal friend, what advice would you give the accountant?