Question
you can help me solve the problem You have recently been hired as theassistantcontroller for Stanton Industries, alarge, publicly heldmanufacturing company. Your supervisor is the
you can help me solve the problem
You have recently been hired as theassistantcontroller for Stanton Industries, alarge, publicly heldmanufacturing company. Your supervisor is the controller, who is responsible to the vice president of finance. The controller has assigned you the task of preparing the year-end adjusting entries. In the receivables area, you have prepared an aging of accounts receivable and have applied historical percentages to the balances of each of the age categories. The analysis indicates that an appropriate balance for the allowance for uncollectible accounts is $180,000. The existing balance in the allowance account prior to any adjusting entry is a $20,000 credit balance. After showing your analysis to the controller, he tells you to change the aging category of alargeaccount from over 120 days tocurrent statusand to prepare a newinvoiceto thecustomerwith a revised date that agrees with the new aging category. This will change the required allowance for uncollectible accounts from $180,000 to $135,000. You ask the controller for an explanation for the change and he tells you We need the extraincome; the bottom line is too low. 1.What is the effect onincomebefore taxes of the change requested by the controller? 2.Discuss theethicaldilemmayou face. Consider your options and responsibilities along with the possible consequences of any action you might take.
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