Thomas Odzer, an accountant for Mennix Company, has made adjusting entries and i

Question

Thomas Odzer, an accountant for Mennix Company, has made adjusting entries and is preparing the adjusted trial balance for the first six months of the year. Financial statements must be delivered to the bank by 5 p.m. to support a critical loan agreement. By noon, Odzer has been unable to balance the adjusted trial balance. The figures are off by $1,320, so he increases the balance of the owner’s Capital account by $1,320. He closes the accounts, prepares the statements, and sends them to the bank on time. He hopes that no one will notice the problem and believes that he can find the error and correct it by the end of next month. Are Odzer’s actions ethical? Why or why not? Did he have other alternatives?

Explanation / Answer

Odzer's actions are not at all ethical.

If he do not know the balance then he should not show it in the owner's capital account because it will unnecessarily increase his capital balance by #1,320.

He should go in detail and check once again.

If then also he was not able to find the difference then he should create a suspense account and enter the differential amount there.

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