Jim Hurley is an accountant for a local manufacturing company. Jim’s good friend, Mike Kotowski, has been operating a retail sporting goods store for about a year. Mike has proposed that the fee he will pay for Jim’s accounting work should be contingent upon his receiving the loan. What factors should Jim consider when making his decision about whether to prepare the financial statements for Mike’s store?

Question

Jim Hurley is an accountant for a local manufacturing company. Jim’s good friend, Mike Kotowski, has been operating a retail sporting goods store for about a year.  Mike has proposed that the fee he will pay for Jim’s accounting work should be contingent upon his receiving the loan. What factors should Jim consider when making his decision about whether to prepare the financial statements for Mike’s store?