1.  Questions
2. What journal entry would the CFO like for you to make to record the purchase of raw materials?
3. What are the standards on the IMA Statement of Ethical Professional Practice that come into play for this decision?
4. According to the IMA, what should you do?

Transcribed Image Text:

You're the accountant at Reacher Manufacturing, a small company that manufactures electronic components for specialty applications. The CFO approaches you a week before fiscal year end, which is December 31, with concerns about not having the cash to pay income taxes at the beginning for next year because cash has not been managed well. The purchasing department bought some extra raw materials on Nov 15 because they're expecting sales to ramp up in January. The CFO tells you to record the purchases of the raw materials as an expense this year so that less taxes will be due. You're the accountant at Reacher Manufacturing, a small company that manufactures electronic components for specialty applications. The CFO approaches you a week before fiscal year end, which is December 31, with concerns about not having the cash to pay income taxes at the beginning for next year because cash has not been managed well. The purchasing department bought some extra raw materials on Nov 15 because they're expecting sales to ramp up in January. The CFO tells you to record the purchases of the raw materials as an expense this year so that less taxes will be due.

Answer rating: 100% (QA)

Journal Entry Debit Raw Materials Inventory Credit Accounts Payable Standards on the IMA Statement o... View the full answer