1. Write a report to Sam By addressing those points below
2. The report should be 2000 words

• Petty cash is $2000. The cash is used for office supplies, lunches, and other minor expenses. The receipts rarely tie to the cash box. Also, the office supplies are being directly expensed to the income statement instead of being capitalized and expensed as they are used.
• The year-end inventory was not independently observed by an auditor.
• The company is using replacement cost to value its inventory as opposed to lower of cost or market.
• A delivery truck purchased for $10,500 was expensed rather than capitalized.
• Some of the accounts payable invoices and aging schedules are not available as three boxes of documentation were damaged by a water heater flooding the area where those records are kept.
• In December, a paycheck was issued to the owner for $75,000. The owner then gave the employees cash bonuses equal to the net amount of his/her paycheck. Only refer to GAAP; don't mention any IRS issues or ramifications regarding this transaction.