Reference no: EM13864577

You are engaged to perform an audit of the Giordani Corporation for the year ended December 31, 2011. 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 2011 was 49,745. Your audit work identified the following items for further investigation:

Selection from the December 2011 Purchase Journal
	Date	RR#	Vendor Name	Amount	Explanation
a.	12/30	49,742	Allen Chem.	$ 29,875	Chemicals purchased for manufacturing process.
b.	12/31	none	Khan Consulting	$ 45,000	Payment for consulting services for the three-month period beginning December 1, 2011. The $45,000 was charged to consulting expenses.
c.	12/31	49,742	Goff Materials	$ 205,000	Raw materials used in the manufacturing process.

Selections from the January 2012 Purchase Journal
	Date	RR#	Vendor Name	Amount	Explanation
d.	1/01	49,746	Temper Trucks	$ 75,985	Purchase of a new forklift.
e.	1/02	49,743	Pack Products	$ 42,000	Paper products used in manufacturing process.
f.	1/02	none	Telecom Inc.	$ 32,450	December 2011 telephone bill.

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, 2011. (In cases where no entry is required, please select the option "No journal entry required" for your answer to grade correctly. Leave no cells blank - be certain to enter "0" wherever required. Omit the "tiny_mce_markerquot; sign in your response.)