Linbarger Bottling Company Case Study

912 Words 4 Pages
Questions 1. What is the accounting problem that the Linbarger Bottling Company faces? Linbarger has a bank reconciliation problem. Bank reconciliation stimulates the accountant to prove an actual funds balance for insertion into the assets of a company at any time. Bank reconciliation is a monthly process by which activity is matched up on a bank statement to ensure that everything is accurately recorded in the company books. Though banking has moved more towards automatic and electronic transactions, it is still analytically important to ensure the cash balance is correct. A bank reconciliation has two parts, the company book side and the bank side. After reconciliation is complete, both balances should match (Onuoha & Amponasah, 2012). There …show more content…
What are the ethical considerations in this case? Provide rationale for why these are ethical considerations. Ethically, the company is considering three different issues. The first is to default on the loan by 120,000. The second is to leave the ledger open for an additional day to allow funding to possibly flow in. The third is to add an additional line item of 150,000 from a custom that is allegedly in the mail. The second option would cause an error in the dates and therefore an inaccuracy in accounting, but ultimately if funding comes in the loan term will be met. The third option ethically is a lie, because alleged money is being placed on the books that has not been received, or may not be received. In option one, the company could default on the loan. A little delay in clearing of finances could result in the loss of goodwill, which can cause consequences for the company’s business relationships. Ethical traits being tested include professionalism, integrity, professional honesty, and reliability (Onuoha & Amponasah, …show more content…
Who will be negatively impacted if you do comply? Provide rationale for why these individuals will be impacted. If I do comply with her instructions as the accountant, it is possible that the overall business can suffer since the check is not in hand, and accounting rules will be broken if that alleged money is recorded as a receipt. Integrity is on the line, so eventually if found out, I still could end up being fired with possible legal consequences for fraud. The expectation to detect and avoid fraud can be very difficult for accountants to meet, but the expectancy to advise and warn is not as difficult. Accountants can better manage fraud risks by communicating and working with all parties on fraud prevention. Many companies miscalculate the consequences of fraud, and the amount of damage that can be caused to both employees and owners (Klein, 2015). This is especially apparent in the reaction of Lisa, and her encouragement of particular actions. 5. What is one alternative that you could pursue in this scenario? Support your recommendations with information you learned in this class. Commercial accounts under normal circumstances usually have a “broker” or another person allocated to their account. The broker can be contacted at the bank, and the situation could be explained, and a grace period requested. This is usually a simple request for accounts in good standing. In order to

Related Documents