Feng Li and Tanya Ng operate The Party Centre, a party supply store in Red Deer, Alberta. The partners split profits and losses equally, and each takes an annual withdrawal of $90,000. To even out the workload, Ng does the buying and Li serves as the accountant. From time to time, they use small amounts of store merchandise for personal use. In preparing for a large private party, Li took engraved invitations, napkins, place mats, and other goods that cost $3,000. She recorded the transaction as follows:

Required
1. How should Li have recorded this transaction?
2. Discuss the ethical dimension of Li's action.

Transcribed Image Text:

Cost of Goods Sold 3,000 Inventory 3,000