ACC 211 Week 5 Discussion 1 | Assignment Help | excelsior-college
- excelsior-college / ACC 211
- 04 Mar 2021
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- Accounting & Economics Assignment Help / Accounting basics
ACC 211 Week 5 Discussion 1 | Assignment Help | excelsior-college
M5D1: Let's Discuss: Impact
to Cost of Goods Sold (Source Case 6-1 Textbook)
Ever since he was a kid, Carl
Montague wanted to be a pro football player. When that didn’t work
out, he found another way to channel his natural competitive spirit: He bought
a small auto parts store in Kentucky that was deep in red ink (negative
earnings). At the end of the year, he created “ghost” inventory by recording
fake inventory purchases. He offset these transactions by “adjustments” to Cost
of Goods Sold, thereby boosting profit and strengthening the balance sheet.
Fortified with great financials, he got bank loans that allowed him to
build up a regional chain of stores, buy a local sports franchise, and take on
the lifestyle of a celebrity. When the economy in the region tanked, he could
no longer cover his losses with new debt or equity infusions, and the whole
empire fell like a house of cards.
For this week’s
discussion, please respond to the questions listed below. In addition to
your initial response, for full credit, please be sure to respond to more than
two other students’ initial responses, as well.
Required Responses:
1.
Based on the facts provided, would the bank loan officer reviewing the
application have sufficient information to detect fraud or falsified
information?
2.
Assume the bank officer was unable to detect any foul play. What other
stakeholders or related parties could be negatively impacted by the actions of
Carl Montague?
3.
What kind of adjustment to Cost of Goods Sold (debit or credit) would
have the effect of boosting earnings?
This discussion
will address the following Module Outcomes:
·
MO1: Analyze merchandising operations and the two types of
inventory systems. (CO1)
·
MO2: Explain the method applied to adjust and close the accounts of
a merchandising business. (CO4, CO5)
Consult the Discussion Posting
Guide for information about writing your discussion posts. It is recommended
that you write your post in a document first. Check your work and correct any
spelling or grammatical errors. When you are ready to make your initial post,
click on "Reply." Then copy/paste the text into the message field,
and click "Post Reply."
To respond to a
peer, click “Reply” beneath her or his post and continue as with an initial
post.
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