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Financial officer for N.A.E Fun Store, a retailer that sells toys for kids

You are required to work in this assignment individually and you should use your own words to solve this assignment. If you cheat from your classmate or copy from any sources (Plagiarism), your assignment will be forward to the College with cheating code!

Question 1: You are the financial officer for N.A.E Fun Store, a retailer that sells toys for kids. The business owner, Abdullah recently reviewed the annual financial statements you prepare and sent you an email stating that he thinks you overstated net income. He explains that although he has invested a great deal in security, he is sure shoplifting and other forms of inventory shrinkage have occurred, but he does not see any deduction for shrinkage on the income statement. The store uses a perpetual inventory system. (3 marks) Required: Prepare a two paragraphs memorandum that responds to the owner's concerns.

Question 2:

• On May 11, Salam Co. accepts delivery of $30,000 of merchandise it purchases for resale from Hiyyah Corporation. With the merchandise is an invoice dated May 11, with terms of 3/10, n/90, FOB shipping point. The goods cost Hiyyah $20,000.

• On May 11, when the goods are delivered, Salam pays $335 to Express Shipping for delivery charges on the merchandise.

• On May 12, Salam returns $1,200 of goods to Hiyyah, who receives them one day later and restores them to inventory. The returned goods had cost Hiyyah $800.

• On May 20, Salam mails a check to Hiyyah Corporation for the amount owed. Hiyyah receives it the following day.

Required: • Please prepare entries that Salam Co. records for these transactions. (2 marks) (Note: Salam Company and Hiyyah Corporation use a perpetual inventory system.)

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