Hart Nance and Jason Symington operate gift boutiques in shopping malls. The partners split profits and losses equally, and each takes an annual drawing of $80,000. To even out the workload, Nance travels around the country inspecting their properties. Symington manages the business and serves as the accountant. From time to time, they use small amounts of store merchandise for personal use. In preparing for his daughter's wedding, Symington took inventory that cost $10,000.
How do you feel Symington should have recorded these transactions? Why? What are the ethical implications of Symington's actions?
The amounts taken for personal use should be recorded exactly as that - personal use. On the tax return for all types of entities, the cost of goods sold lists a line that specifically reads, "purchases less personal ...
This solution discusses taking inventory for personal use from a partnership.