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The project is graded for completeness, professionalism, and accuracy (as well as the usual elements ofgrammar and style).Be sure to thoroughlyaddress all of the requirements outlined and offer...

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ACCT 4023 –Advanced Accounting
Fall 2023
Individual Project - information

The individual project is designed to allow you to demonstrate your knowledge of advanced accounting
and conducting research related to consolidation topics. The project will require organization, critical
thinking, good written communication skills, and an understanding of financial accounting concepts.
This project is consistent with the following objectives.

• Course objective: Students will be able to demonstrate accounting treatment for partnerships.
• Program objective: Students will demonstrate ethical reasoning

The project is graded for completeness, professionalism, and accuracy (as well as the usual elements of
grammar and style). Be sure to thoroughly address all of the requirements outlined and offer complete
support for your discussion. Total points for this project are 180.

This is an individual project and the final product is your individual responsibility.

To avoid plagiarism:
• Always make note of the source used.
• Use quotations when text is directly excerpted from a source.
• When paraphrasing read the original passage several times. Get a complete understanding
of the content and the context of the passage. Use your own words to reflect the idea of
the passage (still cite the source).
• Ask a friend or family member to proofread your work and the sources used.

DUE DATE:
This paper cannot be completed in one evening. Plan your time accordingly. Having a plan will help to
ensure that the research paper is completed on time with thoughtful professional quality. Your
completed paper must be submitted to the dropbox in our Canvas course on or before 11:59p,
December 13th.


Note that this project cannot be successfully completed the night before it is due!


Late papers will not be accepted.



Partners Pat and Stacy have a coin-operated laundry business in a retail shopping center, PS-2 Laundry. The
usiness has operated for several years with the partners sharing income equally. They employ two part-time
workers to assist with routine operations. The part-time employees work alternating shifts and are only there if
either Pat or Stacy is present.

The laundry business is primarily a cash business. On alternate days each partner empties the coins from the
laundromat’s machines and deposits the money in the bank. The business was generating a healthy cash flow for
several years. However, in the last 18 months, cash flow declined precipitously. Stacy believes that the decline in
cash is a result of collusion between the two part-time workers. Stacy assumes that the workers are somehow
igging the machines and requiring the customers to pay them directly. When Stacy shares these concerns with
Pat, Pat assures Stacy that the part-time workers are not stealing money.

Pat has been pocketing cash because of some personal financial problems related to a messy divorce and several
failed investments. Pat is urging Stacy to sell out and liquidate their partnership. Pat believes that upon
liquidation there will be enough cash to overcome the personal financial crisis and repay the cash that has been
taken from the business. Stacy is not aware of Pat’s financial problems.

The following trial balance is prepared by the partners’ accountant.

Dr (Cr)
Cash $37,800
Supplies and prepayments 2,500
Equipment 62,000
Accumulated depreciation (33,583)
Accounts payable (4,950)
Loan payable—Stacy (22,000)
Sales (23,620)
Operating expenses 18,700
Depreciation expense 2,583
Capital—Pat (14,680)
Capital—Stacy (24,750)
Totals $0


In addition, the partnership has a contractual lease on the building where the laundromat is located. The lease expires
five years from now. The monthly payments of $500 are consistently made on time and recorded as part of operating
expense. If the lease is terminated early, the lessor requires a $2,000 payment for early lease termination.

Required:
1. Identify the weakness in the partnership’s internal control which could produce the pattern of declining
cash flows. How (what actions) could the partnership co
ect the internal control weakness? Explain.
2. Do you think fraud has occu
ed? Or an ethical
each? Explain.
3. What are the various ways of resolving the ethical issues? What actions can be implemented, stopped,
evised, etc.? There must be at least two distinct recommendations (more than 2 is fine). Discuss each.
4. Which one of the recommendations is the best resolution for the ethical issues or internal control
weaknesses? Why? Explain.
5. Using Excel: Determine the ending capital balances and prepare a cash distribution plan for the
liquidation. An excel file must be submitted.
6. Show the calculations in the cell(s). An excel file must be submitted.
7. How much must be realized on the sale of the non-cash assets before Pat receives any of the liquidation
proceeds? Do you think it is likely that Pat will receive any proceeds? Do you think Pat will be able to
epay the cash that has been taken? Consider the best- and worst-case scenarios. Explain.
Answered 1 days After Dec 11, 2023

Solution

Prince answered on Dec 13 2023
23 Votes
Ethical Dilemmas and Financial Implications: A Case Study of Internal Control Weakness, Fraud, and Partnership Liquidation in PS-2 Laundry
Student Name
12th Dec 2023
Introduction
This report explores the challenging situation that Pat and Stacy, partners in PS-2 Laundry, a coin-operated laundry business, encountered. The case study reveals a number of issues, including fraudulent operations that were mostly ca
ied out by Pat and internal control flaws that resulted in diminishing cash flow. The paper investigates the unethical behavior in the partnership and suggests fixes to deal with the problems successfully. Additionally, it examines the possible results and difficulties related to the partnership's dissolution, taking into account the intricate financial and moral issues at play.
1st Question:
The partnership's internal control weakness is related to the insufficient separation of responsibilities and supervision in cu
ency handling, which has led to a significant decrease in cash flow. When both partners participate in coin handling procedures on a regular basis without following a systematic strategy, there is a risk of fraud and financial disparities for the company. In addition to jeopardizing the integrity of the financial procedures, the absence of a checks-and-balances system makes it more difficult for the partners to quickly identify and stop fraudulent activity.
The partnership should implement a dual-control system where Pat and Stacy regularly take an active role in coin handling and deposit procedures in order to address this vulnerability in internal control. This cooperative strategy reduces the possibility of fraud or theft by guaranteeing that no one person has complete authority over these crucial financial operations. The dual-control method improves accountability and transparency in the coin-handling procedures by incorporating both parties.
As demonstrated by Chalmers et al. (2019) research, this suggested remedial action is in line with accepted best practices in internal control systems. Their research highlights how crucial it is to develop controls that engage numerous people in crucial financial activities, as well as to segregate roles. The dual-control system protects the partnership's financial integrity by acting as a disincentive to any fraudulent activity and offering a strong mechanism for the early detection and rectification of any abnormalities in the coin-handling procedures.
2nd Question:
Pat's embezzlement of funds is blatant evidence of fraud in the partnership and a grave ethical transgression. Pat's acts constitute a flagrant
each of trust and fiduciary responsibility. They are motivated by personal financial troubles resulting from a contentious divorce and unsuccessful investments. The partners' inability to properly communicate about the diminishing cash flow exace
ates the ethical violation. A key component of moral business conduct is open and honest communication, and the partners' silence about money difficulties fosters dishonesty and erodes the values of a strong working relationship.
Stacy's supposition of collaboration in the absence of hard proof raises additional ethical issues. Even while it makes sense to suspect fraudulent activity given the...
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