Ethical Issues Involving Revenue Recognition
Flash Newton is national sales director at Bright & ShinyToothpaste Company. The firm manufactures and distributes a fullline of premium-price personal care products sold through acarefully selected set of distributors nation wide. The popularityand profit margins of the Bright & Shiny product line make distributorships very profitable and there is intense competitionwhen one becomes available.
Flash, and the regional sales directorsworking for him, are compensated by a base salary and a significantbonus tied to percentage increases in yearly sales. Because of animpending recession, sales have been mostly flat during the first three quarters of the year. On October 3, Flash convened a nationalsales meeting with representatives of all distributors. At that meeting, he presented the distributors with Bright & Shiny’s newest sales plan. All distributors would be required to buy, during the 4th quarter, up to 2 years’worth of inventory of the firms’ products. Further, the prices charged on these special purchases would be 10% greater than usual. Any distributors not agreeing to the proposal would automatically lose their distributorship. Because most distributors are not expected to have cash readily available to pay for these additional purchases under the usual 30-day credit terms, Bright& Shiny will allow up to 12 months to pay.
The new policy has been a huge success and by year end, total orders and shipments to distributors are up by 12% over the previous year. Bright & Shiny recorded all shipments as revenueeven though some distributors were told by lower-level managers that they could return unsold products. Because many distributors could not handle the large shipments in their usual storage facilities, many orders have been shipped to third-party warehouses for storage at Bright & Shiny’s expense. At Flash’s suggestion, and to obtain maximum benefit of this new sales program, the company held the books open for a few days afterDecember 31 to obtain and ship additional orders.
Required: Identify and explain any problems you see withthe sales plan. If you were Bright & Shiny’s CEO, whichaspects of the sales plan would you have approved and which wouldyou have denied. Why? .
z0p 0 = 0 + в өрIApr 29 2021
A. Refer to Narrative 14-2. Lynn Albright is applying for a 30-year, 9 1/4% mortgage. She can handle payments of principal and interest of $372 per month. What is the max...Aug 10 2021
An 8%, 30-year bond has a yield to maturity of 10% and a modified duration of 8 years. If the market yield drops by 15 basis points, there will be a ___ in the bond's pri...Apr 17 2020
Suppose that a fall in consumer spending causes a recession.a. Illustrate the immediate change in the economy using both an aggregate-supply/aggregatedemand diagram and a...Jul 22 2021
9.39.Equivalence of moving average and exponentially weighted moving average control charts. Show that if l = 2/(w + 1) for the EWMA control chart, then this chart is equ...Apr 23 2020
Use the Laplace transform to solve the given initial value problem. y" + 2y' + 5y = e-t sin 2t, y(0) = 2, y'(0) = = -1 ber 2 5 y= ) -2) 8 5 1 y = 2e- cos 2t + e sin 2t -t...Apr 15 2021
Properties of Limits of SequencesWhat is the value of LJul 26 2021
Suppose that you also take out a $1,000 loan at the Cavalier Credit Union. The loan agreement stipulates that you must pay it back with 4% interest in one year, and again...Jul 04 2021
Bui Corp. pays a constant $13.10 dividend on its stock. The company will maintain this dividend for the next nine years and will then cease paying dividends forever.If th...May 06 2020
A shunt reactor of 100MVAR is operated at 98% of its rated voltage and at 96% of its rated frequency.The reactive power absorbed by the reactor is:-Jul 13 2020