Ethical Issue

Thomas Film Productions wishes to expand and has borrowed $100,000.As a condition of making this loan, the bank requires that the business maintain a current ratio of at least 1.50.Business has been good, but not great.Martha Thomas, owner of the business is considering what might happen if she reports a current ratio of 1.40 to the bank.One course of action for Martha is to record in December $10,000 of revenue that the business will earn in January of next year.The contract for this job has been signed.

Requirements:

Initial post:

1.Prepare the proposed journal entry.

2.How would recording the journal entry affect the current ratio?Be very specific and provide sufficient detail to support your answer.

3.Of the four financial statements, which are impacted by the entry and where in the statement?Be specific and provide sufficient detail to support your answer.