10-48. Listed below are eight interbank cash transfers for Steven Smith Co., indicated LO 4, 5, 6 by the letters a through h, for late December 20X1 and early January 20X2. Disbursing Bank Receiving Bank (Month/Day) (Month/Day) Per Bank Per Books Per Bank Per Books Amount 12/29 12/29 12/29 12/29 $52,000 1/02 12/30 12/31 12/30 16,000 1/04 1231 1/02 1/02 24,000 12/31 1/02 12/31 44,000 1/04 1/01 1/03 1/01 15,600 1/02 1/01 12/31 12/31 76,000 1/03 1/02 12/31 1/02 42,000 12/31 1/03 12/30 1/03 10,000 p. 426 For each of the transfers a through h, (1) indicate whether cash is understated, overstated, or correct as a result of the transfer; and (2) provide a brief example of what could cause the situation. Answer in a form such as the one illustrated here. Understated Overstated, Transfor or Correct Example Correct Book entries: The transfer was recorded in the account- ing records as a check written on the disbursitisk on December 29 and to receiving bank on that date. Bank entries: The check was taken to the receiving bank on Decoraber 29 and deposited. The accounts are both in the same bank, and accordingly the transaction wa recorded in both accounts as of that date 10-49. An improper cutoff of transactions around year-end occurs when journal LO 1, 2, 4, 5, 6 entries are recorded in the wrong year. In this case, you are to determine the effects of various cutoff misstatements relating to recording cash receipts received on accounts receivable and the recording of credit sales. To effectively consider the effects of an improper cutoff, it is helpful to consider the underlying journal entries: Type of Transaction Proper Journal Entry (Entries) Cash receipt on an account receivable Cash 3,000.00 Accounts Receivable 3,000.00 Credit sale-periodic inventory system Accounts receivable 2,000.00 2,000.00 Crodit safe-perpetual inventory system Accounts receivable 2000.00 Sales 2,000.00 Cost of Goods Sold 1,300.00 1,300.00 An example of a possible improper cutoff is to "close" the cash receipts journal on December 30 and include December 31 sales in the subsequent year (e.g., the entry is dated January 1 rather than December 31). As a result, cash is understated by $3,000, while accounts receivable is overstated by $3,000 for the year just ended. The effects of closing the sales journal depend upon whether a periodic inventory or perpetual inventory system is in use. The effects of "leaving open" journals past year-end and dating January entries as of December may be determined in a similar manner. Required: Assume that the client made the following actual credit sales and received cash receipts as follows after 12/29/20X8