Scenario 1. The owners of Waren Sports want to sell their business. To get a good price
Question:
Scenario 1.
The owners of Waren Sports want to sell their business. To get a good price they decide to make some alterations to their 2017 records so that their profits increase by $30,000.
Identify four alterations that could be made to their records to achieve a $30,000 increase in their profits. Provide the specific transactions that you would create and quantify the effect of each.
Scenario 2.
The owners of Waren Sports don’t like paying federal taxes. They decide to reduce their profits by $30,000 by falsifying some of their accounting records for 2017.
Identify four alterations that could be made to their records to achieve a $30,000 decrease in their profits. Provide the specific transactions that you would alter and quantify the effect of each.
Provide your answers in the following format
- For each scenario, prepare general journals that show the accounts that will be altered. For each journal provide an explanation that explains what you are doing and how it increases or decreases your profit
- For each scenario, prepare a schedule in the following format:
| Date | General Journal (Account name/Explanation) | Debit | Credit |
| Explanation: | |||
| Explanation: | |||
| Explanation: | |||
| Explanation: |
| Balance sheet | Income and retained earnings statement | ||||||
| Account | Balance before | Balance after | Net impact on profit | Account | Balance before | Balance after | Net impact on profit |
| $30,000 | $30,000 | ||||||
Expert Answer:
All Value shown is on arbitrary basis Balance Sheet Account Income and Retained Earning Statement Balance before Balance After Net impact on profit Ac... View the full answer
