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Robert Hopkins was the senior office employee at the Griffin Equipment Company He enjoyed the complete confidence of the owner William Barton who devoted most of his attention

Robert Hopkins was the senior office employee at the Griffin Equipment Company. He enjoyed the complete confidence of the owner, William Barton, who devoted most of his attention to sales, engineering, and production problems. All financial and accounting matters were entrusted to Hopkins, whose title was office manager. Hopkins had two assistants, but their only experience in accounting and financial work had been gained under Hopkins’s supervision. Barton had informed Hopkins that it was his responsibility to keep him (Barton) informed on the financial position and operating results of the company but not to bother him with details. The company was short of working capital and would occasionally issue notes payable in settlement of past-due open accounts to suppliers. The situations warranting the issuance of notes were decided upon by Hopkins, and the notes were drawn by him for signature by Barton. Hopkins was aware of the weakness in internal control and finally devised a scheme for defrauding the company through understating the amount of notes payable outstanding. He prepared a note in the amount of $24,000 payable to a supplier to whom several invoices were past due. After securing Barton’s signature on the note and mailing it to the creditor, Hopkins entered the note in the Notes Payable account of the general ledger as $4,000, with an offsetting debit of $4,000 to Accounts Payable. Subsequently, when funds became available to the company, he paid the $20,000 of acc

May 09 2020 View more View Less

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