You are engaged to perform an audit of the Giordani Corporation for the year ended December 31, 2018. 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 2018 was 49,745. Your audit work identified the following items for further investigation: 

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, 2018.

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Selections from the December 2018 Purchase Journal Date RR# Vendor Name Amount Explanation $ 29,875 $ 45,000 Allen Chem. a. 12/30 49,742 Chemicals purchased for manufacturing process. Payment for consulting services for the three-month period beginning December 1, 2018. The $45,000 was charged to consulting expenses. Raw materials used in the manufacturing process. Khan Consulting b. 12/31 none c. 12/31 $205,000 49,744 Goff Materials Selections from the January 2019 Purchase Journal Date RR# Vendor Name Amount Explanation $75,985 $42,000 $32,450 Purchase of a new forklift. d. 1/01 49,746 Temper Trucks e. 1/02 f. 1/02 Paper products used in manufacturing process. 49,743 Pack Products Telecom Inc. December 2018 telephone bill. none