Mobile Security, Inc. $($MSI$)$ has been an audit client of Leo & Lee, LLP for the past $12$ years. MSI is a small, publicly traded aviation company based in Cleveland, Ohio, where it manufactures high$-$tech unmanned aerial vehicles $($UAV$),$ also known as drones, and other surveillance and security equipment. MSI's products are primarily used by the military and scientific research institutions, but there is growing demand for UAVs for commercial and recreational use. MSI must go through an extensive bidding process for large government contracts. Because of the sensitive nature of government contracts and military product designs, both the facilities and records of MSI must be highly secured.

In October $2025,$ MSI installed a new cloud$-$based inventory costing system to replace a system that had been developed in$-$house. The old system could no longer keep up with the complex and detailed manufacturing costing process that provides information to support competitive bidding. MSI's IT department, together with consultants from the software company, implemented the new inventory costing system, which went live on December $1,2025.$ Key operational staff and the internal audit team from MSI were significantly engaged in the selection, testing, training, and implementation stages.

The inventory costing system uses various manufacturing costing and unit of production inputs to calculate and produce a database of all product costs and recommended sales prices. It also integrates with the general ledger each time there are product inventory movements such as purchases, sales, waste, and damaged inventory losses.

The following list of sales invoices are entered in the sales journal for the months of June $2026$ and July $2026,$ respectively. All goods are shipped FOB shipping point.

$\backslash$table$[[$Sales$,$Sales,Cost of$,],[$Invoice$,$Invoice,Merchandise,Date$],[$Amount$,$Date,Sold,Shipped$]]$

June

$\backslash$table$[[$a$.,$$$30,000,$June $21,$$$20,000,$June $29,],[$b$.,20,000,$June $30,8,000,$June $20,],[$c$.,10,000,$June $29,6,000,$June $30,],[$d$.,40,000,$June $30,24,000,$July $3,],[$e$.,100,000,$June $30,56,000,$June $30,($shipped to consignee$)]]$

July

$\backslash$table$[[$f$.,$$$60,000,$June $30,$$$40,000,$July $1],[$g$.,40,000,$July $2,23,000,$July $1],[$h$.,80,000,$July $3,55,000,$June $30]]$

Analysis and evaluation: Analyze the eight transactions shown above. Based on a sales cutoff analysis, record necessary adjusting journal entries at June $30$ in connection with the foregoing data. $($Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select $"$No entry" for the account titles and enter $0$ for the amounts.$)$

Analysis and evaluation: Analyze the eight transactions shown above. Based on a sales cutoff analysis, record necessary adjusting journal entries at June $30$ in connection with the foregoing data. $($Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select $"$No entry" for the account titles and enter $0$ for the amounts.$)$

Date Account Titles and Explanation

June $30$

$($To record the revenues$)$

$($To record the cost of goods sold$)$

eTextbook and Media

List of Accounts

Assistance Used

Accounts Receivable

Cost of Goods Sold

Inventory

Revenues