ACCOUNTING

THE NET INCOME OF SIMON AND HOBBS, A DEPT.STORE,DECREASED SHARPLY DURING 2000.CAROL SIMON, OWNER OF THE STORE, ANTICIPATES THE NEED FOR A BANK LOAN IN 2001. lATE IN 2000, SIMON INSTRUCTS THE STORE'S ACCOUNTANT TO RECORD A 410,000 SALE OF FURNITURE TO THE SIMON FAMILY, EVEN THOUGH THE GOODS WILL NOT BE SHIPPED FROM THE MANUFACTURER UNTIL jAN. 2001. SIMON TELLS THE ACCOUNTNAT NOT TO MAKE THE FOLLOWING DEC. 31, 2000 ADJUSTING ENTRIES: SALARIE OWED TO EMPLOYESS $900, PREPAID INS. EXPIRED $400. wHY IS SIMON TAKING THIS ACTION? iS HER ACTION ETHICAL? GIVE REASON, IDENTIFYING THE PARTIES HELPED AND THE PARTIES HARMED BY SIMON'S ACTION.

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  1. You needn't shout.

    Her action is not ethical. The employees are harmed because they're losing $900. I'm not sure about the rest, though.

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