Roy Rogers is the accounting manager at Tire, Inc., a tire manufacturer. He plays golf with the CEO, who is somewhat of a celebrity in the local community. The CEO would be able to receive a huge bonus if the company increases net income by the end of the year. Roy, wanting to become part of the elite circle the CEO was in, explained he knows some tricks to increase the company income. This would require revising some journal entries on the rent paid on storage units used by the company. Roy changed the rental payments to prepaid rent, allowing the CEO to receive his bonus and the revisions were never discovered. By Roy changing the journal entries, how did it cause the net income to increase and the CEO to get his bonus? With the change of the journal entries, who gained and who lost? What are the consequences of Roys actions if they are discovered?
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