Chi 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 Sales Cost of Goods Sold Cash Receipts (Receivables Only) 12/30/2018 $ 4,000 $ 2,600 $ 6,000 12/31/2018 $ 2,000 $ 1,200 $ 8,000 1/1/2019 $ 1/2/2019 $ 8,000 $ 7,000 $ 5,800 $ 4,400 $ 6,400 5,000 Assume the following balances at 12/29/18: Cash $40,000 Accounts Receivable $40,000 Sales $50,000 I Cost of Goods Sold $31,000 o Inventory $20,000 Determine the overstatements and understatements that would result from the following situations. 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 left the sales journal open after year end for two extra days and included the January 1 & 2 sales in the December 31 totals. The company uses perpetual inventory system. What effect would this have on the 2018 financial statements? Complete the schedule below (enter amounts up top) ABC Company left the sales journal open after year end for two extra days and included the January 1 & 2 sales in the December 31 totals. The company uses perpetual inventory system. What effect would this have on the 2018 financial statements? Complete the schedule below (enter amounts up top) ACCOUNT Correct Balance Incorrect Balance (Amount Recorded) Amount of Error Accounts Receivable Inventory Sales Cost of Goods Sold Gross Profit #1 #5 #9 #13 #17 #2 #6 #10 #14 #18 Account Overstated, Understated or Correct #3 #7 #11 #15 #19 #4 #8 #12 #16 #20 # Question Number