The company you work for sells screen-printed T-shirts.  Your company sources plain white T-shirts from a supplier in a third world country; then unique designs are screen-printed onto the white T-shirts and marked up to retail price.  

You recently discovered that the current supplier for your company’s T-shirts is employing child labor in the factories in their country, and paying well below the rate paid to adults.    This is not unusual in that country, and the local government routinely looks the other way at companies who do it.   The result is that the supplier is able to provide T-shirts to your company at a very low price, relative to the competition.

Should your company change suppliers based on this new information – Why or why not?  What would be the accounting impact of changing the supplier (identify specific accounts impacted)?  Provide support for your opinion.

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