Barnes Company has been doing business with mainland China for the past three years. The company produces

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Barnes Company has been doing business with mainland China for the past three years. The company produces leather handbags that are in great demand in the cities of China. On a recent trip to Hong Kong, Kwan Cho, the purchasing agent for Shen Enterprises, approached Barnes salesperson Harriet Makay to arrange for a purchase of 2,500 handbags. Barnes’s usual price is $75 per bag. Kwan Cho wanted to purchase the handbags at $65 per bag. After an hour of haggling, they agreed to a final price of $68 per item. When Makay returned to her hotel room after dinner, she found an envelope containing five new $100 bills and a note that said, “Thank you for agreeing to our order of 2,500 handbags at $68 per bag. My company’s president wants you to have the enclosed gift for your fine service.” Makay later learned that Kwan Cho was following her company’s normal business practice. What should Harriet Makay do? Is the gift hers to keep? Be prepared to justify your opinion.

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Managerial Accounting

ISBN: 978-0618777181

8th Edition

Authors: Susan V. Crosson, Belverd E. Needles

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