As assistant controller for a small firm, you are responsiblefor recording and posting of the daily cash receipts anddisbursements to the ledger account. After you have posted theentries, your boss, the controller, prepares a trial balance andthe financial statements. You make the following entries on June30.

Cash                       1,430

Account Receivable 1,950

           Service Revenue       3,380

To record daily cash sales and sales on account

Advertising Exp       12,500

UtilitiesExp              22,600

RentExp                  24,000

Salary & Wage Exp 17,400

         Cash                            76,500

To record daily cash disbursement

The daily cash disbursements are much larger on June 30 than onany other day because many of the company's major bills are paid onthe last day of the month. After you have recorded these twotransactions and before you have posted them to the ledgeraccounts, your boss comes to you with the following request:

As you are aware, the first half of the year has been a toughone in the consulting industry and for ourbusiness.  With first-half bonuses based on net income, Iam wondering whether you or I will get a bonus this time around.However, I have a suggestion that should allow us to receivesomething for our hard work and at the same time not hurt anyone.Go ahead and post the June 30 cash receipts to the ledger, butdon't bother to post that day's cash disbursements. Even though thetreasurer writes checks on the last day of the month and younormally journalize the transaction on the same day, it is silly tobother posting entry to the ledger since it takes at least a weekfor the checks to clear the bank.

1. Recognize an ethical dilemma: Explain why the controller'srequest will result in an increase in net income. On the basis ofyour answer, what ethical dilemma(s) do you now face?

2. a. Do you agree with the controller that the omission of thejournal entry on June 30 " will not hurt anyone"? Who may benefitfrom the omission of the entry? Who may be harmed?

     b. How are they likely to benefit or beharmed?

     c. What rights or claims may beviolated?

     d. What specific interest are inconflict?

    e. What are your responsibilities andobligations?