Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. tif 4-1 ethics in action new wave images is a grap

TIF 4-1 Ethics in Action New Wave Images is a graphics design firm that prepares...

80.2K

Verified Solution

Question

Accounting

image

TIF 4-1 Ethics in Action New Wave Images is a graphics design firm that prepares its financial statements using a calendar year. Manny Kinn, the company treasurer and vice president of finance, has prepared a classified balance sheet as of December 31. In January, this balance sheet will be submitted along with an application for a loan from First Peoples Community Bank. An excerpt from the balance sheet follows: ETHICS Cash Accounts receivable 25,000 85,000 Total assets $250,000 The accounts receivable balance includes a $56,000 loan to Tom Morrow, the company president. Tom borrowed the money from New Wave 18 months earlier for a down payment on a new home. Tom has orally assured Manny that he will pay off the loan within the next year. Because Tom is the company president, Manny treats the amount due as a trade account receivable. In addition, Manny knows that the bank will consider a large balance in trade accounts receivable more favorably than a large personal loan to a single individual. Manny reported the $56,000 in the same manner on the preceding year's balance sheet. 1. Is Manny behaving ethically by reporting the loan to Tom as a trade account receivable? Why? 2. Who will be affected by Manny's decision

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students