Suppose that you have just been hired as a part-time clerk in a large department store. Each

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Suppose that you have just been hired as a part-time clerk in a large department store. Each week you work three evenings and all day Saturday. Without the income provided by this job, you would be unable to stay in college. Charles Riley, the manager in the clothing department to which you are assigned, has worked for the store for many years. Managers receive both a salary and a commission on their sales.
Late one afternoon, just as you begin work, Mr. Riley is ringing up a purchase. You observe that the purchase consists of two expensive suits, a coat, and several pairs of trousers and that the customer declines Mr. Riley’s offer to have the store’s tailor do the alterations. After the customer departs with his merchandise and as Mr. Riley is departing for the evening, you say, ‘‘See you tomorrow.’’ Mr. Riley gives a brief, barely audible response and departs for the evening.
As you return to the sales counter, you glance at the paper tape displayed through a small opening in the cash register that records all sales on an item-by-item basis. You have just completed the store course in register operation, so you are quite familiar with the register and the tape it produces. To your surprise, you note that the last sale consisted of just a single pair of trousers.
Required:
1. What do you conclude about this transaction?
2. What are the possible consequences for the store, for Mr. Riley, and for you personally of reporting your observations to Mr. Riley’s superiors?
3. What are the possible consequences for the store, for Mr. Riley, and for you personally of not reporting your observations to Mr. Riley’s superiors?
4. What would your decision be?
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Cornerstones of Financial and Managerial Accounting

ISBN: 978-1111879044

2nd edition

Authors: Rich, Jeff Jones, Dan Heitger, Maryanne Mowen, Don Hansen

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