For each of the six items provided in the table above


You are engaged to perform an audit of the Giordani Corporation for the year ended December 31, 2011. You have decided to perform the following cutoff test for payables and accruals: Select all items greater than $25,000 for two business days before and after year-end from the purchases journal and ensure that all transactions are recorded in the proper period.

During your firm's observation of Giordani's physical inventory you obtained the following cutoff information: the last receiving report number in 2011 was 49,745. Your audit work identified the following items for further investigation:

Selection from the December 2011 Purchase Journal


Date

RR#

Vendor Name

Amount

Explanation

a.

12/30

49,742

Allen Chem.

$ 29,875

Chemicals purchased for manufacturing process.

b.

12/31

none

Khan Consulting

$ 45,000

Payment for consulting services for the three-month period beginning December 1, 2011. The $45,000 was charged to consulting expenses.

c.

12/31

49,742

Goff Materials

$ 205,000

Raw materials used in the manufacturing process.

Selections from the January 2012 Purchase Journal


Date

RR#

Vendor Name

Amount

Explanation

d.

1/01

49,746

Temper Trucks

$ 75,985

Purchase of a new forklift.

e.

1/02

49,743

Pack Products

$ 42,000

Paper products used in manufacturing process.

f.

1/02

none

Telecom Inc.

$ 32,450

December 2011 telephone bill.

Required:

For each of the six items provided in the table above, consider whether there is evidence of proper cutoff of payables and accruals (i.e., the transaction is recorded in the proper period). If the item is not properly recorded, prepare the necessary adjusting entries at December 31, 2011. (In cases where no entry is required, please select the option "No journal entry required" for your answer to grade correctly. Leave no cells blank - be certain to enter "0" wherever required. Omit the "tiny_mce_markerquot; sign in your response.)

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Financial Accounting: For each of the six items provided in the table above
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