Reference no: EM132802174
Problem - You are engaged in an audit of the financial statements of the Meruem Company for the year ended October 31, 2019, and have observed the physical inventory count on that date.
All merchandise received up to and including October 30, 2019, has been included in the physical count. The following list of invoices is for purchases of merchandise and is entered in the purchases journal for the months of October and November 2019, respectively.
|
Amount (in Pesos)
|
FOB
|
Date of invoice
|
Date merchandise received
|
|
|
|
7,200
|
Destination
|
10/19/2019
|
10/21/2019
|
|
4,400
|
Destination
|
10/20/2019
|
10/22/2019
|
|
9,250
|
Shipping Point
|
10/20/2019
|
10/30/2019
|
|
4,000
|
Destination
|
10/25/2019
|
11/03/2019
|
|
2,500
|
Destination
|
11/04/2019
|
10/29/2019
|
|
10,250
|
Shipping Point
|
10/26/2019
|
10/30/2019
|
|
9,200
|
Shipping Point
|
10/27/2019
|
10/30/2019
|
|
13,600
|
Destination
|
10/21/2019
|
10/30/2019
|
|
34,600
|
Destination
|
10/29/2019
|
10/30/2019
|
|
November 2019
|
|
2,000
|
Destination
|
10/29/2019
|
11/04/2019
|
|
3,500
|
Destination
|
10/30/2019
|
10/31/2019
|
|
1,250
|
Shipping Point
|
10/27/2019
|
10/30/2019
|
|
7,230
|
Shipping Point
|
11/02/2019
|
10/30/2019
|
|
12,820
|
Shipping Point
|
10/23/2019
|
11/03/2019
|
|
14,200
|
Shipping Point
|
10/23/2019
|
11/03/2019
|
|
15,000
|
Destination
|
10/27/2019
|
11/03/2019
|
No inventory records are maintained, and the physical inventory count is to be used as a basis for the financial statements.
Required -
1. What is the adjusting entry (one compound entry)?
2. Based on your purchases cut-off test, what are invoices that should be included?
3. Based on your purchases cut-off test, what are invoices that should be excluded?
4. The net adjustment to accounts payable is? Indicate increase or decrease.
5. Meruem's October 31 physical count should be increased by?