Accounting1  ethical issue
posted by Christine .
Discount Hardware Wishes to expand its business and has borrowed $200,000 from the Toronto Dominion Bank. As a condition for making this loan, the bank required discount hardware to maintain a current ratio of atleast 1.50 and a debt ratio of no more than 0.50, and to submit annual financial statements to the bank.
Business during the third year has been good but not great. Expansion costs have brought the current ratio down to 1.40 and the debt ratio up to 0.51 at december 15. The managers od discount hardware are considering the implication of reporting this current ratio to TD canada trust. One course of action that managers are considering is to record in december of the third year some revenue on account that discount Hardware will earn January of next year. The contract for this job has been signed, and discount Hardware will deliver the materials during January.
Question
1) Journalize the revenu transaction using your own numbers, and indicate how recording this revenue in December would affect the current ratio and the debt ratio?
2) State whether it is ethical to record the revenue transactionin December. Identify the accounting principle relevant to this situation?
3) Propose an ethical course of action for Discount Hardware?
Respond to this Question
Similar Questions

Business Math
I completed a problem where there was a $7855.00 note at the bank that charges a 14.3 % discount rate. The loan is for 190 days. I found the proceeds to be $7268.31 and the effective rate charged by the bank to be 15.29 %. How do I … 
Math Help!!!!!
4) Jim has been offered a substantial cash discount if he pays an invoice 60 days earlier. One bank will loan him the needed money at 11% simple interest rate. A second bank will also loan him the money, but at bank discount rate. … 
Finance
Can anyone explain to me how to use this formula? 
Finance
Brand Advertising is offered a 3/10 net 40 trade discount by its supplier. In the past Brand has been able to ger away with paying for supplies on credit in 60 days. Since it doesn't have money on hand to take advantage of the discount, … 
algebra
A local bank lends $12,000 using a 150day 9% simple interest note that was signed on May 18. The bank later sells the note at a discount of 14% on July 5. Find (a) the discount, (b) the proceeds, and (c) the amount of money the bank … 
math promissory notes
1.Joanne borrowed RM5000 for 180 days at a discount rateof 8 1/2 %.find the proceeds. 2.A businessman needs RM12000 for four months. What should be the size of the loan if his bank charges a discount rate of 9.5%. 
math
1.Joanne borrowed RM5000 for 180 days at a discount rateof 8 1/2 %.find the proceeds. 2.A businessman needs RM12000 for four months. What should be the size of the loan if his bank charges a discount rate of 9.5%. 
Finance
Brand advertising is offered a 3/10 net 40 trade discount by its supplier. In the past Brand has been able to get away with paying for supplies on credit in 60days. since it doesnt have money on hand to take advantage of discount, … 
business
In calculating the bank discount when discounting an interestbearing note, which one of the following is not used in the calculation? 
math bus 105
Calculate (a) interest and maturity value, (b) discount period, (c) bank discount, and (d) proceeds. Assume ordinary interest. (Round answers to nearest hundredths) Date of note Face value Length of note Interest rate Bank discount …