Jazz, Inc., which has a December 31 year end, designs and sells fashions for young professional women.

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Jazz, Inc., which has a December 31 year end, designs and sells fashions for young professional women. Lyla Hilton, president of the company, fears that the forecasted 2010 profitability goals will not be reached. She is pleased when Jazz receives a large order on December 30 from The Executive Woman, a retail chain of upscale stores for businesswomen. Hilton immediately directs the controller to record the sale, which represents 13 percent of Jazz’s annual sales. At the same time, she directs the inventory control department not to separate the goods for shipment until after January 1. Separated goods are not included in inventory because they have been sold. On December 31, the company’s auditors arrive to observe the year-end taking of the physical inventory under the periodic inventory system. How will Hilton’s actions affect Jazz’s 2010 profitability? How will they affect Jazz’s 2011 profitability? Were Hilton’s actions ethical? Why or why not?

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Principles of Accounting

ISBN: 978-1439037744

11th Edition

Authors: Needles, Powers, crosson

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