You are engaged to perform an audit of the giordani

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Reference no: EM13982769

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:

Selections from the January 2011 Purchase Journal

 

Date

RR#

Vendor  Name

Amount

 

Explanation

a.

Dec-30

49742

Allen Chem.

29875

 

Chemicals purchased for manufacturing process.

b.

Dec-31

none

Khan Consulting

45000

 

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

c.

Dec-31

49,742

Goff Materials

205000

 

Raw materials used in the manufacturing process.

 

Selections from the January 2012 Purchase Journal

 

Date

RR#

Vendor Name

Amount

Explanation

d.

1-Jan

49746

Temper Trucks

75985

 

Purchase of a new forklift.

e.

1-Feb

49743

Pack Products

42000

 

Paper products used in manufacturing process.

f.

1-Feb

none

Telecom Inc.

32450

 

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 "$" sign in your response.) 

 

General Journal

Debit

Credit

a.

            

  

 
 

                 

 

  

       

b.

            

  

 
 

                 

 

  

       

c.

            

  

 
 

                 

 

  

       

d.

            

  

 
 

                 

 

  

       

e.

            

  

 
 

                 

 

  

       

f.

            

  

 
 

                 

 

  

Reference no: EM13982769

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