Question: I'm having trouble with #2 and 3 2. Case 2: Arthur Chen, a newly minted CPA, was on his second audit job in the Midwest

I'm having trouble with #2 and 3

2. Case 2: Arthur Chen, a newly minted CPA, was on his second audit job in the Midwest with a new client called Parson Farm Products. He was looking through the past four years of financials four years of financials and doing a few ratios when he noticed something odd. The current ratio went from In 2017, despite the fact that 2017 has record income. He decided to sample a few transactions from December 2017. He found that many of Parson's customers had returneu products to the company because of substandard quality. Chen discovered that the company was clearing the receivables but "stashing" the debits in obscure long-term asset account called "grain reserves" rather than debiting Sales Returns and Allowances to keep the company's income in the black (i.e., positive income). 1. How did the fraudulent accounting just described affect the current ratio? 2. What is the correct entry for the fraudulent accounting? 3. How did the fraudulent accounting affect the income statement and balance sheet? 4. Can you think of any reason why someone in the company would want to take this kind of action

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