Week 8 Discussion

Please note that this discussion board will require a minimum of three posts. These consist of your initial post, your response to comments that I post to your thread, and at least one response to a classmate. If you post late in the week, it's possible that I may not be able to provide a comment to you. In that case, please be sure to provide response posts to at least two classmates.

Chapter 9: QuickBooks Adjustments

Additionally, please refer to Chapter 3 in your Cengage Accounting eText, accessible from the eText link in the Course Navigation Panel to the left of your screen.

Requirement:

Chris P. Bacon is the chief accountant for CV Industries, a large manufacturing company. In addition to its normal business activities, the company has excess warehouse space that it rents out to local businesses. Because the typical renter is a small business, CV Industries requires renters to make lease payments for the entire rental period on the day the lease is signed. As a result, CV Industries typically reports a large unearned rent balance on its balance sheet.

After making adjusting entries for the current year, Chris prepares the adjusted trial balance and notices that the company's earnings will decline significantly. He presents the adjusted trial balance to the company's CFO, Antonio Beldin, who is concerned about the earnings decline. Mr. Beldin notices the large unearned rent balance and proposes making an additional end-of-period adjusting entry to recognize the entire unearned rent balance as revenue in the current period. Chris protests, reminding Mr. Beldin that the adjusting entry for unearned rent has already been made. Mr. Beldin assures Chris that his proposal is acceptable, reminding Chris that because we have already received the cash, we have the right to recognize the revenue in the current period. He instructs Chris to make the additional adjusting journal entry. Chris is hesitant to follow these instructions, but he is sensitive to the company's emphasis on earnings growth and makes the adjusting entry as instructed.

Is Chris behaving ethically? Please let us know why or why not? Who is affected by Chris's decision?

Responses to Classmates:

Please explain to your classmates why adjusting entries needed at the end of an accounting period?

Response to Instructor:

Please check your thread for questions or comments from me and be sure to provide a comprehensive response, as requested.

Writing:

Please make sure that your initial post contains a properly cited reference. Please use APA style. You should cite your text as a minimum. Additionally, check your spelling and proofread your post before you hit the submit button.