WestWorld Robotics wishes to expand their business operations and has borrowed $250,000 from a regional bank where they manufacture state-of-the-art robotic limbs. As a condition for the loan, Midland Bank is requiring that WestWorld maintain a current ratio of a minimum 1.5:1.

Orders for the company's products have been very good, however, not what was expected during financial planning for the year. The costs to expand the business have resulted in a current ration of 1.4:1 on December 10. Jayson Hopwood, CEO and sole shareholder of the business, is wondering what the effects might be if he reports a current ratio of 1.4:1 to Midland Bank.

One option for Hopwood is to record and report a large sale of the company's products in December that will actually not occur until a few days after the new accounting period begins on January 1. The contract has been signed for the sale, but no monies or products have changed hands.

Please:

Prepare a journal entry to record the transaction as of December 10, assuming the amount is $75,000. Also, indicate how recording this transaction in December could affect the company's current ratio.

Discuss if it is ethical to record and report this sale transaction in December, highlighting any accounting principle relevant to this situation.