Makoto Auto Parts sells new parts for foreign automobiles to auto dealers. The August and September sales journals have the following information included: (Click the icon to view additional information.) (Click the icon to view the information included in the August and September sales For late August and early September, shipping documents are billed on sales invoices as journals.) follows: (Click the icon to view the list of sales invoices on which the shipping documents were Read the requirements. billed.) Requirement a. What are the accounting requirements for a correct sales cutoff? A. A shipment should be recorded as a sale when control has been transferred to the buyer and collectability is reasonably assured. B. A shipment should be recorded as a sale when the merchandise is received by the purchaser. C. A shipment should be recorded as a sale when the payment for the merchandise has been received by the seller. D. A shipment should be recorded as a sale when the merchandise is shipped. Data table Data table Requirements a. What are the accounting requirements for a correct sales cutoff? b. Which sales invoices, if any, are recorded in the wrong accounting period? Prepare an adjusting entry to correct the financial statement for the year ended August 31, 2019. Assume that the company uses a periodic inventory system (inventory and cost of sales do not need to be adjusted). c. Describe, in general terms, the audit procedures you would follow in making sure that cutoff for sales is accurate at the balance sheet date. d. Identify internal controls that will reduce the likelihood of cutoff misstatements. How would you test each control? More info Company policy requires that a prenumbered shipping document be issued for each sale. At the time of pickup or shipment, the shipping clerk records the date on the shipping document. The last shipment made in the fiscal year ended August 31, 2019, was recorded on document 2167. Shipments are billed in the order that the billing clerk receives the shipping documents