NOTE Please read this first: I do not beleive in someone doing my assignments, t
ID: 2795813 • Letter: N
Question
NOTE Please read this first: I do not beleive in someone doing my assignments, this is supposed to be 3pages long but all I want is you to help me identify what the questions ask then I will be the one to write the paper. It is more like you help me make an outline that I will follow to research and write. For example, what are the key ethical considerations? your answer should be something like Your personal and professional honesty, integrity, professionalism, reliability and objectivity. I will be the one to expand what you give into a paper. Thank You
Imagine you are the assistant controller in charge of general ledger accounting at Linbarger Company. Your company has a large loan from an insurance company. The loan agreement requires that the company’s cash account balance be maintained at $200,000 or more, as reported monthly. At June 30, the cash balance is $80,000. You give this update to Lisa Infante, the financial vice president. Lisa is nervous and instructs you to keep the cash receipts book open for one additional day for purposes of the June 30 report to the insurance company. Lisa says, “If we don’t get that cash balance over $200,000, we’ll default on our loan agreement. They could close us down, put us all out of our jobs!” Lisa continues, “I talked to Oconto Distributors (one of Linbarger’s largest customers) this morning. They said they sent us a check for $150,000 yesterday. We should receive it tomorrow. If we include just that one check in our cash balance, we’ll be in the clear. It’s in the mail!”
a. What is the accounting problem that the Linbarger Company faces?
b. What are the negative impacts that can happen if you do not follow Lisa Infante’s instructions to wait one more day to post the balance?
c. Who will be negatively impacted if you do comply? Provide a rationale for why these individuals will be impacted.
Explanation / Answer
a) As per the insurance company norms. Linbarger Company has to maintain a cash balance of $ 2,00,000 at the end of the month. But in the month of june, on 30th june compan's cash balance is $80,000. But one of its customer sent a check of $1,50,000 on yesterday and company will recieve it by tomorrow. It means as per accounting terms Linbarger company has a cash balance of $80,000 and cash in trasnit of $ 1,50,000. It has to pass the journal entry for the cash in transit balance.
b) Lisa Infante, the financial vice president. Lisa is nervous and instructs you to keep the cash receipts book open for one additional day for purposes of the June 30 report to the insurance company. Lisa says, “If we don’t get that cash balance over $200,000, we’ll default on our loan agreement. They could close us down, put us all out of our jobs!”
c) If the company didnt follow the terms of the isnurance company. Not only the company but also employees, suppliers who supply material to company and customers who are depending on the company's products withh also have suffer.
here in the given question, Lisa continues, “I talked to Oconto Distributors (one of Linbarger’s largest customers) this morning. They said they sent us a check for $150,000 yesterday. We should receive it tomorrow. If we include just that one check in our cash balance, we’ll be in the clear. It’s in the mail!
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