Student Post Review
First page (less if needed) write a review of a students post. I have also included the topic.
Topic
On a recent trip to Africa, J.T. Brown, sales manager of Prompt Technology, took his wife along at company expense. Linda White, vice president of sales and Brown's boss, thought his travel and entertainment expenses seemed excessive. But White approved the reimbursement because she owed Brown a favor. White was aware that the company president reviews all expenses recorded in the cash payments journal, so White recorded Brown's wife's expenses in the general journal as follows:
Step 2 Post the following to the discussion board.
Respond to the following questions and, if appropriate, include personal experience as part of your answers.
Does recording the transaction in the general journal rather than in the cash payments journal affect the amounts of cash and total expenses reported in the financial statements?
Why did White record these expenses in the general journal?
What is the ethical issue in this situation? What role does accounting play in this issue?
Response:
Does recording the transaction in the general journal rather than in the cash payments journal affect the amounts of cash and total expenses reported in the financial statements?
If these expenses are not recorded in the appropriate account, they will certainly affect other accounts. In this case, the cash payments journal would be the appropriate journal to record the transaction. This is because it was a company expense; the employee is to receive a reimbursement payment from the company for his expenses. Since the cash payments journal is a very specific type of journal, it would not be appropriate to place the reimbursement in the “general journal.”
Why did White record these expenses in the general journal?
Aside from owing brown a favor, White recorded the expenses in the general journal because it would help hide the transaction from the president (who oversees everything), and it would allow White to revise the transaction at the end of the period.
What is the ethical issue in this situation? What role does accounting play in this issue?
The actions of White (and Brown) are unethical in this case. Brown’s actions were unethical because he used a company vacation for personal gain; he essentially stole money from his company because he claimed all personal expenses as his business expense. White’s actions were unethical because she approved the reimbursement although she knew it was an excessively high amount, despite conducting a proper investigation, or obtaining proof of the expenses. Additionally, White tried to hide the approval from the president (her boss), by recording it in the general journal, instead of the cash payments journal.
Second page: Read and answer all questions: Topic: Mel O'Conner owns rental properties in Michigan. Each property has a manager who collects rent, arranges for repairs, and runs advertisements in local newspapers. The property managers transfer cash to O'Conner monthly and prepare their own bank reconciliations. The manager in Lansing has been stealing from the company. To cover the theft, he understates the amount of the outstanding checks on the monthly bank reconciliation. As a result, each monthly bank reconciliation appears to balance. However, the balance sheet reports more cash than O'Conner actually has in the bank. In negotiating the sale of the Lansing property, O'Conner is showing the balance sheet to prospective investors.
Step 2 Post to the discussion board.
Respond to the following questions and, if appropriate, include personal experience as part of your answers.
Identify two parties other than O'Conner who can be harmed by this theft. In what ways can they be harmed?
Discuss the role accounting plays in this situation. What internal controls could be put in place to prevent this type of theft?
Discussions
Name
Institutional Affiliation
Student Post Review
The student supported the move to take Brown’s wife’s expenses as company expenses. I, on the other hand, believe that Brown should not be allowed to present his wife’s expenses as company expenses since his wife was not included in the travel itinerary. This is one of the weak points in the response of the student, seeing that Brown should not be allowed to cash in favors for company funds. Brown should instead be forced to shoulder his wife’s expenses and receive compensation only for the amount of money he actually spent for the business trip. The student does well in addressing the real reason behind White recording the expense in the general journal. White does indeed record the payment in the general journal to cover up the transaction as a form of paying back the favor which she owes Brown. By choosing to doctor the financials in exchange for the return favor, White goes against all ethical requirements as demanded by an executive of her caliber within the company. The student strongly addresses the issues of ethics by Brown and White. White’s and Brown’s actions are representative of individuals that are willing to compromise their integrity by ‘cheating’ the systems put in place to ensure transparency and accountability. Unfortunately, even th...