Complete this scenario

Anonymous

Question Description

Instructions:

  • Read the following scenario.
  • Answer the questions that follow. Your answers should result in a 2-3 page submission.
  • Reference back to your text book for guidance on how to think through the scenario.

Scenario:

Imagine you are the assistant controller in charge of general ledger accounting at Linbarger Company. Your company has a large loan from an insurance company. The loan agreement requires that the company's cash account balance be maintained at $200,000 or more, as reported monthly. At June 30, the cash balance is $80,000. You give this update to Lisa Infante, the financial vice president. Lisa is nervous and instructs you to keep the cash receipts book open for one additional day for purposes of the June 30 report to the insurance company. Lisa says, "If we don't get that cash balance over $200,000, we'll default on our loan agreement. They could close us down, put us all out of our jobs!" Lisa continues, "I talked to Oconto Distributors (one of Linbarger's largest customers) this morning. They said they sent us a check for $150,000 yesterday. We should receive it tomorrow. If we include just that one check in our cash balance, we'll be in the clear. It's in the mail!"

Questions

  1. What is the accounting problem that the Linbarger Company faces?
  2. What are the ethical considerations in this case? Provide rationale for why these are ethical considerations.
  3. What are the negative impacts that can happen if you do not follow Lisa Infante's instructions to wait one more day to post the balance?
  4. Who will be negatively impacted if you do comply? Provide a rationale for why these individuals will be impacted.
  5. What is one alternative that you could pursue in this scenario? Support your recommendations with information you learned in this class.

Tutor Answer

Jkennish
School: UIUC

Hey buddy? Find the attached file. Thanks and Goodbye

Running head; ACCOUNTING ETHICS

Accounting Ethics
Name
Instructor
Course details
Date

1

ACCOUNTING ETHICS

2
Accounting Ethics

The accounting intricacy that the Linbarger Company faces is that it cannot be able to
obey the promises they made to the insurance company. The company cannot raise the minimum
amount they had agreed with the insurance company, breaching one of the principles if
insurance-utmost good faith. This has forced it to opt for a wrong decision of keeping the cash
receipt book open when a summary of the accounts ought to be made.
According to the scenario, there are some of the ethical issues that need to be tackled.
First, by agreeing to the vice president's decision is a cont...

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