Days Ahead, a charitable organization, has a standing agreement with First
National Bank. The agreement allows Better Days Ahead to overdraw its cash
balance at the bank when donations are running low. In the past, Better Days
Ahead managed funds wisely and rarely used this privilege. Jacob Henson has
recently become the manager of Better Days. To expand operations, Henson
acquired office equipment and spent large amounts on fundraising. During
Henson’s tenure, Better Days Ahead has maintained a negative bank balance of
What accounts do you see being affected as a result of Jacob Henson’s actions?
Which accounts do you think would experience a debit? Which accounts do you
think would experience a credit? How would a negative bank balance be listed in
a Trial Balance? Is there an ethical issue in this situation? Do you approve or
disapprove of Jason Henson’s management of Better Days Ahead’s funds?