功课问题不懂 求答案QQ

Danville Bottlers is a wholesale beverage company. Danville uses the FIFO inventory method to determine the cost of its ending inventory. Ending inventory quantities are determined by a physical count. For the fiscal year-end June 30, 2013, ending inventory was originally determined to be $3,265,000. However, on July 17, 2013, John Howard, the company's controller, discovered an error in the ending inventory count. He determined that the correct ending inventory amount should be $2,600,000.


Danville is a privately owned corporation with significant financing provided by a local bank. The bank requires annual audited financial statements as a condition of the loan. By July 17, the auditors had completed their review of the financial statements which are scheduled to be issued on July 25. They did not discover the inventory error.

John's first reaction was to communicate his finding to the auditors and to revise the financial statements before they are issued.


However, he knows that his and his fellow workers' profit-sharing plans are based on annual pretax earnings and that if he revises the statements, everyone's profit sharing bonus will be significantly reduced.

• Why will bonuses be negatively affected? What is the effect on pretax earnings?
  
• If the error is not corrected in the current year and is discovered by the auditors during the following year's audit, how will the error be reported in the company's financial statements?
  
• Discuss the ethical dilemma Howard faces.
  
  

请帮助小妹QQ 谢谢大神

1. Decrease of ending inventory will result in increase in COGS, thus decrease the profit margin and decrease the earnings.
2. If found in next year, it will cause an unusual increase in COGS, thus negatively affect next years earning.
3. financial statements should always reflect the economic reality, if ignore the  error the income statement is going to be overstated. knowingly overstate the income is neither legal nor ethical. it violate the purpose of financial statements

please help~! thank you so much

可以解释第2题还有第3题多一点吗？小妹头脑不太好... QQ

i do need help..please help...thanks