The auditor of Mikel's Shops obtained the following information when performing cut off testing procedures during their observation of Mikel's physical inventory count at December 31, 2009.
Bill of Lading number 1235 1236 1237 1238
Date 12/31/09 12/31/09 1/2/10 1/2/10
Sales Price $12,000 $4,500 $18,000 $16,000
Cost of Goods $9,000 $3,000 $12,000 $12,000
When comparing the cut-off information to the sales records, the auditors found that all there shipments were recorded as 2009 sales. The good shipped on bill of lading 1235 and 1236 were not counted in the inventory, but good of bill of lading 1236 and higher were included.
Required: prepare the appropriate journal entry to correct the cut-off error.
Help with your homework study question:
To correct #1237 posted in wrong year.
The solution provides the correct journal entry to record the cut-off error for Mikel's Shops. All calculations are provided.