Ethical Dilemma: Recognition Point and Ethical Considerations C7. Business Application ▶ Robert Shah, a sales representative for Quality Office Supplies Corporation, will receive a substantial bonus if he meets his annual sales goal. The company’s recognition point for sales is the day of shipment. On December 31, Shah realizes he needs sales of $2,000 to reach his sales goal and receive the bonus. He calls a purchaser for a local insurance company, whom he knows well, and asks him to buy $2,000 worth of copier paper today. The purchaser says, “But Robert, that’s more than a year’s supply for us.” Shah says, “Buy it today. If you decide it’s too much, you can return however much you want for full credit next month.” The purchaser says, “Okay, ship it.” The paper is shipped on December 31 and recorded as a sale. On January 15, the purchaser returns $1,750 worth of paper for full credit (approved by Shah) against the bill. Should the shipment on December 31 be recorded as a sale? Discuss the ethics of Shah’s action.
Ethical Dilemma: Recognition Point and Ethical Considerations C7. Business Application ▶ Robert Shah, a sales representative for Quality Office Supplies Corporation, will receive a substantial bonus if he meets his annual sales goal. The company’s recognition point for sales is the day of shipment. On December 31, Shah realizes he needs sales of $2,000 to reach his sales goal and receive the bonus. He calls a purchaser for a local insurance company, whom he knows well, and asks him to buy $2,000 worth of copier paper today. The purchaser says, “But Robert, that’s more than a year’s supply for us.” Shah says, “Buy it today. If you decide it’s too much, you can return however much you want for full credit next month.” The purchaser says, “Okay, ship it.” The paper is shipped on December 31 and recorded as a sale. On January 15, the purchaser returns $1,750 worth of paper for full credit (approved by Shah) against the bill. Should the shipment on December 31 be recorded as a sale? Discuss the ethics of Shah’s action.
Chapter18: Accounting Periods And Methods
Section: Chapter Questions
Problem 1RP
Related questions
Question
Ethical Dilemma: Recognition Point and Ethical Considerations
C7. Business Application ▶ Robert Shah, a sales representative for Quality Office
Supplies Corporation, will receive a substantial bonus if he meets his annual sales goal.
The company’s recognition point for sales is the day of shipment. On December 31,
Shah realizes he needs sales of $2,000 to reach his sales goal and receive the bonus. He
calls a purchaser for a local insurance company, whom he knows well, and asks him to
buy $2,000 worth of copier paper today. The purchaser says, “But Robert, that’s more
than a year’s supply for us.” Shah says, “Buy it today. If you decide it’s too much, you
can return however much you want for full credit next month.” The purchaser says,
“Okay, ship it.” The paper is shipped on December 31 and recorded as a sale. On January 15, the purchaser returns $1,750 worth of paper for full credit (approved by Shah)
against the bill. Should the shipment on December 31 be recorded as a sale? Discuss the
ethics of Shah’s action.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 5 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Financial Reporting, Financial Statement Analysis…
Finance
ISBN:
9781285190907
Author:
James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:
Cengage Learning