Reference no: EM132486252

Question - For this assignment you are to assume that you are a staff accountant at Build-A-Toy, a manufacturer of high end expensive toys. Build-A-Toy uses a periodic inventory system and prepares annual financial statements on December 31. The chief financial officer is concerned about having enough cash to pay the expected income tax bill because of Build-A-Toy's poor cash management. On November 15, excess inventory of toy parts (raw materials) was purchased in anticipation of an expected increase in toy production which will begin in January. To decrease the company's tax liability, the chief financial officer tells you to record the purchase of this inventory as part of supplies and expense it in the current year; this would decrease the company's tax liability by increasing expenses.

Required -

1. In which account should the purchase of toy parts be recorded? Why?

2. How should you respond to this request by the chief financial officer?