Ethical Issues in Accounting for Merchandising Business

School: Tarrant County College, Fort Worth - Course: ACCT 2760 - Subject: Accounting

Assignment 07.1: Accounting for Merchandising Business Angela Morales National American University AC2760 Financial Accounting for Managers Submitted to Letisha Thompkins July 24, 2022

Assignment 07.1: Accounting for Merchandising Business "On July 29, 20Y1, Ever Green Company, a garden retailer, purchased $12,000 of seed, terms 2/10, n/30, from Fleck Seed Co. Even though the discount period had expired, Mary Jasper subtracted the discount of $240 when she processed the documents for payment on August 13, 20Y1(Warren, Farmer, 2020, p.193)." In Case 4-1 the assignment asks if Mary Jasper behaved in a professional manner by subtracting the discount, even though the discount period had expired. According to our textbook any bank error that is in your favor is considered unethical. "You might experience a bank error in your favor, such as a mis posted deposit. Such errors are not a case of "found money," as in the Monopoly® game. Bank control systems quickly discover most errors and make automatic adjustments. Even so, you have a legal responsibility to report the error and return the money to the bank (Warren, Farmer, 2020, p.213)." "A common discount, called a sales discount, encourages customers to pay their invoices early. For example, a seller may offer credit terms of 2/10, n/30, which provides a 2% sales discount if the invoice is paid within 10 days. If not paid within 10 days, the total invoice amount is due within 30 days. As we discussed earlier in this chapter, a buyer refers to a sales discount as a purchases discount (Warren, Farmer, 2020, p. 152)." If the customer does not pay their invoice according to the terms, they are considered as thieves from the company because the financial statements for the company will not equal out. "When a seller pays a customer a refund, the seller decreases Cash and Customer Refunds Payable (Warren, Farmer, 2020, p.153)." Since Mary Jasper took the discount of $240, she essentially stole $240 from the Cash and Customer Refunds Payable. "Retailers can normally estimate, based upon past operations,