RE Accounting Ethics Question?
Billys Film Productions wishes to expand and has borrowed $100,000. As a condition for making this loan, the bank requires that the store maintained a current ratio of at least 1.50. Business has been good but not great. Expansion costs have brought the current ratio down to 1.40 at December 15. Ryan Grant, owner of the business, is considering what might happen if he reports a current ratio of 1.40 to the bank. Once course of action for Grant is to record in December $10,000 of revenue that the business will earn in January of next year. The contract for this job has been signed.
The Question:
Journalize the revenue transaction, and indicate how recording revenue in December would affect the current ratio.
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Billys Film Productions wishes to expand and has borrowed $100,000. As a condition for making this loan, the bank requires that the store maintained a current ratio of at least 1.50. Business has been good but not great. Expansion costs have brought the current ratio down to 1.40 at December 15. Ryan Grant, owner of the business, is considering what might happen if he reports a current ratio of 1.40 to the bank. Once course of action for Grant is to record in December $10,000 of revenue that the business will earn in January of next year. The contract for this job has been signed.
The Question:
Journalize the revenue transaction, and indicate how recording revenue in December would affect the current ratio.
