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fredd [130]
3 years ago
11

Daryl Kirby opened Squid Realty Co. on January 1, 2015. At the end of the first year, the business needed additional capital. On

behalf of Squid Realty Co., Daryl applied to Ocean National Bank for a loan of $375,000. Based on Squid Realty Co.'s financial statements, which had been prepared on a cash basis, the Ocean National Bank loan officer rejected loan as too risky. After receiving the rejecting notice, Daryl instructed his accountant to prepare the financial statement on an accrual basis. These statements included $65,000 in accounts receivable and $85,000 in accounts payable. Daryl then instructed his accountant to record an additional $30,000 of accounts receivable for commissions on property for which a contract had been signed on December 28, 2015. The title to the property is to transfer on January 5, 2016, when an attorney formally records the transfer of the property to the buyer. Daryl then applied for a $375,000 loan from Free Spirit Bank, using the revised financial statements. On this application, Daryl indicated that he had not previously been rejected for credit.
Required:
Discuss the ethical and professional conduct of Daryl Kirby in applying for the loan from Free Spirit Bank.
Business
1 answer:
STALIN [3.7K]3 years ago
6 0

Answer:

There are issues with Revenue recognition, Accrual basis of accounting and Cash basis of accounting.

Explanation:

The ethical issues are important to handle with care in business. The accountant has used accrual basis accounting technique in order to apply for a loan. The revised financial statements are prepared with accrual concept so that the company is successful in procuring loan. The revenue should be recognized when performance obligation is completed and the required services are rendered. The accrual concept states that the transaction should be recorded when it occurs regardless when the cash is actually received. Daryl has been involved in unethical practice as he has instructed his accountant to prepare revised financial statements to portray that the company's performance is good. It is an intention to deceive bank in order to procure loan.

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Domestic market centers are geographical areas that sell household linens.
bagirrra123 [75]
The correct answer is false.


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4 0
3 years ago
Genesis Scents has two divisions: the Cologne Division and the Bottle Division. The Bottle Division produces containers that can
ElenaW [278]

Answer: $4

Explanation:

The Bottle division is said to be able to meet all excess demand outside as well as that of the Cologne Division.

When this is the case in a company, individual divisions are allowed to transfer to each other at a rate equal to their Variable Costs. This is the general rule.

The Variable Costs for the containers is $4 so that is the transfer price as well.

7 0
3 years ago
This year Randy paid $29,050 of interest on his residence. (Randy borrowed $464,000 to buy his residence, and it is currently wo
Luden [163]

Answer:

the last part of the question is missing, so I looked for it:

a. Randy received $2,200 of interest this year and no other investment income or expenses. His AGI is $75,000.

b. Randy had no investment income this year, and his AGI is $75,000.

a) Randy can deduct $31,575:

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  • he can deduct $4,725 - $2,200 = $2,525 as investment interest expense

b) Randy can deduct $29,050

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5 0
3 years ago
True or false? West African coastal countries have borrowed money from the World Bank and the International Monetary Fund.
Phantasy [73]
True, West African countries borrowed money fro the World Bank and the International Monetary Fund. West African countries are developing economies which similar to other developing economies in Africa and the rest of the world have taken loans and development funds from the IMF and the World Bank. 
4 0
3 years ago
Read 2 more answers
Quantitative Problem 1: Hubbard Industries just paid a common dividend, D0, of $1.30. It expects to grow at a constant rate of 2
blondinia [14]

Answer:

Current price is equal to $16.575

Explanation:

It is given common dividend D_0=1.30

Growth rate = 2% = 0.02

Required rate of return = 10% = 0.1

Dividend paid in next year

D_1=D_0(1+g)=1.30\times 1.02=1.326

Current price is given by P_0=\frac{D_1}{R_e-g}

P_0=\frac{1.326}{0.1-0.02}=16.575

Therefore current price is equal to $16.575

6 0
3 years ago
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