Accounting for Merchandising Operations

Please rRead & review chapters for this week:

Accounting for Merchandising Operations
Inventories and Cost of Sales

Books is Bus 112 Principles of accounting if you have this just research for me you did the good job the first one hoping goes well.

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You are the financial officer for Music Plus, a retailer that sells goods for home entertainment needs. The business owner, Vic Velakturi, recently reviewed the annual financial statements you prepared and sent you an e-mail 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.

Prepare a brief memorandum that responds to the owner’s concerns.

Complete the assignment in a Word document. Make sure you are clear with your responses. Utilize your textbook as a resource for the information that it is asking for you to input. This assignment is due at the end of the week.

Read carefully and answer the question. If you need any question please let me know.

SAMPLE SOLUTION

This memorandum seeks to address all of your concerns about the prepared financial statement. Firstly, I wish to reassure you that the financial statement is right and that the net income has not been overstated. In the income statement, we have recognized the expenses of shoplifting as well as the shrinkage in the inventory (Phillips et al., 2019). In preparing the income statement, the two principles that were used are the materiality principle and the fair value accounting principle. The material information defines anything which can possibly influence the economic decisions for financial report users…