The Auditors of Mikel's Shops Obtained the Following Information When

question 16

Essay

The auditors of Mikel's Shops obtained the following information when performing cutoff testing procedures during their observation of Mikel's physical inventory count at December 31, 2020:
$\begin{array}{lcccc}\text { Bill of Lading Number }&1235&1236&1237&1238\\\text { Date } & 12 / 31 / 20 & 12 / 31 / 20 & 1 / 2 / 20 & 1 / 2 / 20 \\\text { Sales price } & \$ 12,000 & \$ 4,500 & \$ 18,000 & \$ 16,000 \\\text { Cost of goods } & \$ 9,000 & \$ 3,000 & \$ 12,000 & \$ 12,000\end{array}$ When comparing the cutoff information to the sales records, the auditors found that all these shipments were recorded as 2020 sales. The goods shipped on bills of lading 1235 and 1236 were not counted in the inventory, but the goods on bill of lading 1237 and 1238 were included.Required:Prepare the appropriate journal entry to correct the cutoff error. (If no entry is required for a transaction/event, select "No journal entry required")

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Definitions:

Decision Tree

A graphical representation used in decision analysis to visually and explicitly represent decisions and decision making.

Expected Value

A calculated average of all possible values for a random variable, weighted by their probabilities of occurrence.

Receptive

Being open and willing to accept new ideas, suggestions, or changes.