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P. 5
Student Preparation Strategy
Everyday Ethical Dilemna
This exercise is intended to prepare students for issues they may face at some in their working
career in accounting. It also reinforces their understanding of currently covered material, in this
case, how cash discounts work.
Dilemna
Take the discount or not.
John Graham works in the accounting department of Wilcox and Company. It is John’s job to
review the accounts payable data to make sure that the company takes advantage of all discounts
that are offered for early payment. He noticed that he overlooked an offered discount from Allray
Company. He mentions his error to his supervisor, Mary Scott. Mary ponders the issue a bit and,
since the discount amount is material, suggests that John write the check to Allray, taking the
discount. She also instructs him to backdate the check so it appears to have been written within
the discount period. What should John do, and explain your reason(s).
