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 o Assume the following balances at 12/29/18: Cash $60,000 o Accounts Receivable $55,000 o Sales $50,000 o Cost of Goods Sold $30,000 o Inventory $20,000 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 (Amount Recorded) Amount of Error Account Overstated, Understated or Correct #3 #1 #4 #2 #6 #5 #7 #8 Accounts Receivable Inventory Sales Cost of Goods Sold Gross Profit #10 #11 #9 #13 #17 #14 #18 #15 #19 #12 #16 #20