After reading the paragraphs, list the journal entries you think Rite-Aid would have used to do what is described here. You will have to make an educated guess as to what journal entries the company would use to cover up the fraud.
The following paragraphs describe fraudulent accounting committed by the company Rite-Aid in 1999. After reading the paragraphs, list the
Bergonzi personally determined the gross profit entries without input or review by anyone. These entries were completely unsubstantiated.
The reversal of the gross profit entries described above created an understatement of fourth quarter income that necessitated the recording of new entries in the fourth quarter that would overstate income in the fourth quarter by at least a like amount. Some of these entries were recorded just as the fiscal year was ending or just after the year ended. Rite Aid's reported net income of $143 million for fiscal year 1999 was materially overstated as a result of these entries. In fact, without such entries Rite Aid would have suffered a net loss for FY 1999.
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