Case 1: Retainer Fees as Sales (Chapter 9)

Bunch o' Balloons markets balloon arrangements to companies that want to thank clients and employees. Bunch o' Balloons has a unique style that has put it in high demand. Consequently, Bunch o' Balloons has asked clients to establish an account. Clients are asked to pay a retainer fee equal to about three months of purchases. The fee will be used to cover the cost of arrangements delivered and will be reevaluated at the end of each month. At the end of the current month, Bunch o' Balloons has $43,900 of retainer fees in its possession. The controller is eager to show this amount as sales because it represents certain sales for the company.

1. List alternatives and evaluate the impact of each on those affected: What are your options in dealing with the ethical dilemma(s) you identified in (1) above

2. Select the best alternative: Among the alternatives, which one would you select?