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what should kristi do ? what would you do ? -> Ethics Should revenue be recorded early? Carnival Custom Painting's owner, Kristi Seay, is hoping
what should kristi do ? what would you do ?
-> Ethics Should revenue be recorded early? Carnival Custom Painting's owner, Kristi Seay, is hoping to get a loan from her local bank. The business's van engine has just died, and she has no extra cash to replace the engine. Kristi needs a short-term loan of $3,000. Her friend, Brian, is a teller at the bank and has told Kristi that the bank will only approve her for the loan if the business has a current ratio that is above 1.2. Currently, Carnival's current ratio is 1.1. Brian is aware that Kristi has just received a contract for painting a new commercial building. Kristi has told Brian that she ex- pects revenue of $15,000 from the contract but won't receive payment until she completes the job. She plans on starting the job next week, but she won't be finished for another two months, not soon enough to use the cash to replace the engine in the van. Brian has sug- gested to Kristi that she go ahead and record the revenue and cash receipt of the painting contract even though she hasn't completed it. This, he tells her, will increase her current assets and thereby increase her current ratio to 1.4,. well above the bank minimum. What should Kristi do? What would you do? She should not Step by Step Solution
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