1st half Course Requirement, 1st Term, Academic Year 2012-2013 Source: Weygandt, Chalmers, Mitrione, Fyfe, Kieso and Kimmel (2010), Principles of Financial Accounting, 2nd edition, New Jersey; John Wiley & Sons, Inc., page 229.
“Missing the Discount Period”
Antonia Belle was just hired as the assistant treasurer of Exclusive Store, which is a specialty chain with nine retail stores concentrated in one metropolitan area. Among other things, the payment of all invoices is centralized in one of the departments Antonia will manage. Her primary responsibility is to maintain the business’ high credit rating by paying all bills when due and to take advantage of all cash discounts.
Chris Kelly, the former assistant treasurer who has been promoted to treasurer, is training Antonia in her new duties. He instructs Antonia that she is to continue the practice of preparing all cheques “net of discount” and dating the cheques the last day of the discount period. ‘But, Chris continues, ‘we always hold the cheques at least 4 days beyond the discount period before mailing them. That way we get another 4 days of interest on our money. Most of our creditors need our business and don’t complain. And, if they scream about our missing the discount period, we blame it on the mail room or the post office. We’ve only lost one discount out of every hundred we take that way. I think everybody does it. By the way, welcome to our team!’
a. What are the ethical considerations in this case?
b. Who are the stakeholders that are harmed or benefitted in this situation? c. Whould Antonia continue the practice started by Chris? Does she have any choice?
2. Write your answer to the above questions following the format below:
a. Paper size: 8.5” x 11” (letter size bond paper) b. Margin: 1” on all sides
c. Font and font size: Tahoma 11
d. Paragraph alignment:...