You are engaged to perform an audit of the Giordani Corporation for the year ended December 31, 2013. You have decided to perform the following cutoff test for payables and accruals. Select all items greater than $ 25,000 for two business days before and after year- end from the purchases journal and ensure that all transactions are recorded in the proper period. .

During your firm’s observation of Giordani’s physical inventory you obtained the following cutoff information: the last receiving report number in 2013 was 49,745. Your audit work identified the following items for further investigation:

Required:

For each of the six items provided in the table above, consider whether there is evidence of proper cutoff of payables and accruals (i. e., the transaction is recorded in the proper period). If the item is not properly recorded, prepare the necessary adjusting entries at December 31, 2013.

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Selections from the December 2013 Purchase Joumal Amount Explanation Date RR# Vendor Name 12/30 49,742 Allen Chem. s20,875 $45,000 Chemicals purchased for manufacturing process. Payment for consulting services for the three-month period beginning December 1, 2013. The $45,000 was charged to consulting expenses. Raw materials used in the manufacturing process. b. 12/31 Khan Consulting hone C. 12/31 49,744 Goff Materials $205,000 Selections from the January 2014 Purchase Joumal Explanation Date RR# Vendor Name Amount d. 1/01 e. 1/02 f. 1/02 Temper Trucks Pack Products 49,746 49,743 $75,985 $42,000 $32,450 Purchase of a new forklft. Paper products used in manufacturing process. December 2013 telephone bil. Telecom Inc. none