Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Ken Franklin is the sales manager of Davidson Enterprises, a very profitable distributor of office furniture to local businesses. A recent economic downturn has created

Ken Franklin is the sales manager of Davidson Enterprises, a very profitable distributor of office furniture to local businesses. A recent economic downturn has created an extremely tight cash position, and the company has been hurt by the bankruptcy of two key customers. In late October, anticipating an economic recovery, Franklin began an extensive remodeling of the company's sales floor. Construction costs, decorating, and equipment purchases are projected to cost $250,000. Davidson has a policy that individual expenditures in excess of $200,000 must be approved by the firm's board of directors. Franklin, unfortunately, missed the deadline to have the board consider this project at its regular September meeting. Not wanting to wait until the next meeting in December, he subdivided the project in two partsconstruction and decorating ($190,000) and equipment purchases ($60,000)neither of which needed board approval because of the dollar amounts involved. The project was recently completed, and sales have begun to recover. Customers have raved about the new sales area, noting that it is far superior to those of Davidson's competitors.

Required:

1. Would Franklin's approach of subdividing the project in two parts have any effect on the company's financial statements? Briefly explain.

2. Briefly discuss whether Franklin behaved in an ethical manner.

3. Which, if any, of the following standards of conduct would have applicability to Franklin's conduct: competence, confidentiality, integrity, or credibility? Briefly explain.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Statistical Sampling And Risk Analysis In Auditing

Authors: Peter Jones

1st Edition

1138263214, 978-1138263215

More Books

Students also viewed these Accounting questions

Question

State the uses of job description.

Answered: 1 week ago

Question

Explain in detail the different methods of performance appraisal .

Answered: 1 week ago