The following sales were selected for a cutoff test of Genius Monitors, Inc., for the 31 December 2003 financial statements. All sales are credit sales and are FOB shipping point. They are recorded on the billing date.

Required:

a. What adjusting journal entries, if any, would you make for each of these items? (Do not consider the inventory implications of this cutoff.)

b. What complications are created by shipping terms of FOB destination?

c. Under what circumstances might an auditor accept sales that are recorded when shipped, even though they are shipped FOB destination?

Transcribed Image Text:

Invoice Number Sales Price 36590 36591 2,750 25,390 12/28/03 12/29/03 Shipped Date Billed 12/29/03 1/2/04 36592 9,200 1/3/04 12/31/03 36593 570 1/2/04 1/3/04