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Explain what marge should do in the situation

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Reference no: EM132484304

Point 1: Marge Jackson is a staff accountant at EquipEx Company, a manufacturer of tools and equipment. The company is under pressure from investors to increase earnings, and the president of the company expects the Accounting Department to "make this happen." Marge's boss, who has been a mentor to her, is concerned that if earnings do not increase, he will be terminated.

Point 2: Shortly after the end of the fiscal year, the company performs a physical count of the inventory. When Marge compares the physical count to the balance of the inventory account, she finds a significant amount of inventory shrinkage. The amount is so large that it will result in a significant drop in earnings this period. Marge's boss asks her not to make the adjusting entry for shrinkage this period. He assures her that they will get "caught up" on shrinkage in the next period, after the pressure is off to reach this period's earnings goal.

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Question 1: Explain what Marge should do in this situation? Why?

Reference no: EM132484304

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