Joshua Thorp opened Laser Co. on January 1, 2011. At the end of the first year,
ID: 2346767 • Letter: J
Question
Joshua Thorp opened Laser Co. on January 1, 2011. At the end of the first year, the business needed additional funds. On behalf of Laser, Joshua applied to Vermont National Bank for a loan of $500,000. Based on Laser financial statements, which has been prepared on a cash basis, the Vermont National Bank loan officer rejected the loan as too risky. After receiving the rejection notice, Joshua instructed his accountant to prepare the financial statements on an accrual basis. These statements included $90,000 in accounts receivable and $35,000 in accounts payable. Joshua then instructed his accountant to record ad additional $25,000 of accounts receivable for commissions on property for which a contract had been signed on December 28th, 2011. The title to the property is to transfer on January 5th, 2012, when an attorney formally records the transfer of the property to the buyer. Joshua the applied for a $500,000 loan from NYC Bank, using the revised financial statements. On this application, Joshua indicated that he had not previously been rejected for credit. Discuss the ethical and professional conduct of Joshua Thorp in applying for the loan from NYC Bank.Explanation / Answer
Because business practices affect everything from the global economy to the state of the environment, business ethics have never been so widely analyzed, questioned, debated, and reported as they are today. Business ethics relate both to the conduct of organizations as a whole and to the individuals within those organizations. The media has played a significant role in revealing ethical violations committed by both large and small companies over the years, but governments and public initiatives are expected to play the largest roles in combating unethical practices.
Over the past hundred years, the main areas of concern in terms of ethical conduct of organizations have included fair and humane treatment of workers, respect for the environment, honesty in financial reporting, and product safety. Joshua Thorp has used unethical personal and professional means to get this goal.
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