Question 1) Many people intentionally (fraudulently) misrepresent the figures to the accounts in exhibit 1 regarding the journal entries 1 through 8. Enron, and other companies/organizations have shown us that individuals have various excuses to their reasoning on why they committed fraud – according to anti-fraud partners, “the fraud triangle includes pressures (financial pressure, vice pressure, work-related pressure, other pressure), opportunity (lack of controls, can’t judge performance quality, failure to prevent fraud perpetrators, lack of access to information, ignorance [apathy, incapacity], lack of audit trail), and rationality (with fraud, the greater the perceived opportunity or the more intense the pressure the less rationalization it takes to motivate someone to commit fraud .Likewise the more dishonest perpetrator is the less opportunity or pressure it takes to motivate fraud).” It’s disheartening when people commit fraud, and even when it’s possible to perform fraud, I wish people would rethink the consequences of committing fraud because that minimizes the desire to go through with the fraudulent act. Reminder from our prior accounting courses, “everyone is being held responsible when fraud is committed – individual requiring the fraud to be committed, the accountant committing the fraud, etc.”
Question 2) CASH | | DEBIT | CREDIT | | | (1) | $165,000 | $1,485 | (2) | | | | $15,500 | (4) | | | | $1,320 | (5) | | | | $935 | (6) | | | | $1,100 | (7) | | | | $275 | (8) | END |

BANK LOAN PAYABLE | | DEBIT | CREDIT | | | | | $100,000 | (1) | END |

RENT EXPENSE | | | DEBIT | CREDIT | | END | (2) | $1,485 | | |

PROPRIETOR’S CAPITAL OE OWNER’S EQUITY | | DEBIT | CREDIT | | | | | $65,000 | (1) | END |

INVENTORY OR MERCHANDISE INVENTORY | | | DEBIT | CREDIT | | END |