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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Ethics in Action

Anstead Co. is experiencing a decrease in sales and operating income for the fiscal year ending October 31. Ryan Frazier, controller of Anstead Co., has suggested that all orders received before the end of the fiscal year he shipped by midnight, October 31, even if the shipping department must work overtime. Because Anstead Co. ships all merchandise FOB shipping point, it would record all such shipments as sales for the year ending October 31, thereby offsetting some of the decreases in sales and operating income Discuss whether Ryan Frazier is behaving in a professional manner.

To determine

FOB Shipping point:

FOB Shipping pointmeans that the buyer pays all costs incurred for the delivery of goods, once the goods are left from the supplier’s warehouse. The buyer becomes the owner of the goods in transit, when the goods are shipped by the seller is termed as FOB shipping point.

To discuss: if Ryan is behaving in a professional manner in the given scenario.

Explanation

Yes. Ryan, Controller of A Company, is behaving ethical and professional manner. The company is following FOB shipping point method when shipping goods to its customers. Ryan has instructed that all the order that is received before the end of fiscal year has to be shipped by midnight. As the company follows merchandise FOB Shipping point, the company should record the sales in the current year October 31st...

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