Question Details

Jim Mahan, a new employee of Riggs 



1
Jim Mahan, a new employee of Riggs Company, recorded $1,000 in consigned goods received as part of the firm's inventory. The goods were received one day after the end of the fiscal period, but Jim reasoned that the goods should be included in inventory sooner because Riggs paid the freight. The mistake was brought to his attention by the purchasing department who said the goods should not have been recorded as Riggs- inventory at all. Jim told Sara Himes, the purchasing supervisor, that nobody needed to worry, because the mistake would cancel itself out the following month. In Jim's opinion, there was no reason to get everyone excited over nothing, especially since it was monthly, and not annual, financial statements that were affected. Sara Himes has reported the problem to the accounting department.
Required:
You are Jim's supervisor. Write a memo to Jim explaining why the error should have been corrected.




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