Sunbeam did not account for vendor rebates correctly. Vendor rebates should be recorded as a decrease to cost of goods sold. Instead, Sunbeam presented the vendor rebates in the financial statements as an increase to sales revenue. Although this would not impact net income, this was an incorrect procedure that resulted in overstating sales revenue.

In addition, Sunbeam did not record some of the vendor rebates in the correct accounting period. Vendor rebates should be recorded as the vendor rebates are received. Instead, Sunbeam recorded the vendor rebates all at once. Some of the vendor rebates should not have been recorded until future periods. This was also an incorrect procedure that resulted in overstating sales revenue as well as net income. …show more content…
Ms. DenDanto also exhibited moral courage by drafting the memo dated March 12, 1998. Although she did not give it to the executive management and board of directors as originally intended, she did present the memo to her supervisor (Hartshorne) and the chief financial officer (Kersh) at Sunbeam. She also had the courage to resign less than a month after she was talked out of sending the memo.

If I was in the same difficult situation, I probably would have handled the situation the same way as Ms. DenDanto. However, upon my resignation I would have sent the memo. It would be a tough decision to give up my livelihood, but I could not have survived in such a toxic work