= Adobe Reader Touch Effects of an Improper Cutoff Assume that the client made the following actual credit sales and received cash receipts as follows after 12/29/18: . Date Sales Cost of Goods Sold Cash Receipts (Receivables Collected) 12/30/2018 $5,000 $ 2,500 $ 4,000 12/31/2018 $3,000 $ 1,500 $ 3,500 1/1/2019 $9,000 $ 1/2/2019 $7,000 $ 4,500 $ 3,500 $ 4,500 4,000 Assume the following balances at 12/29/18: o Cash $50,000 o Accounts Receivable $45,000 o Sales $55,000 o Cost of Goods Sold $35,000 Inventory $25,000 Determine the overstatements and understatements that would result from the following situation. Assume that each situation is independent of one another. In the case of a perpetual inventory, assume that the year-end inventory count did not identify and correct the misstatements. ABC Company closed the sales journal after 12/30/2018. 12/31/18 transactions were recorded in January 2019 records. The company uses perpetual inventory system. What effect would this have on the 2018 financial statements? Complete the schedule below: ACCOUNT Correct Balance Incorrect Balance Account Overstated, Understated or Correct #16 Amount of Error Accounts Receivable #17 3/8 Inventory #18 #19 + Sales #20 #21 Cost of Goods Sold #22 #23 Gross Margin #24 #25 4:39 PM 1 A lica 2/23/2021