1. During the audit of your client's revenue and receivables cycle at year end 12/31/20, the audit team determined that the client had an accounts receivables and related sales transaction of $3,000,000 that was recorded on 12/31/20 and the bill of lading indicated that the shipment (FOB shipping) left the dock on 12/31/20 at 10pm. The related inventory was $2,100,000.

a) What adjusting entries are necessary at 12/31/20?

b) What principal assertion does the adjusting entries address?

2. Provide examples of substantive analytical review and test of details for each assertion of expense:

a) Completeness

b) Cutoff

c) Accuracy d) Classification