Assume That You Have Received the Following Cut-Off Information for Sales

question 39

Essay

Assume that you have received the following cut-off information for sales revenue at ABC Company.Gross margin is 45% for the company.The physical inventory count was done on December 31,2012,the company's year-end.At this time book inventory was $1,348,000.Physical inventory was $1,231,000.All sales are shipped FOB shipping point.Inventory related to shipping documents 10,419 and 10,421 were counted during the physical count.Inventory related to shipping documents 10,418 and 10,420 were not counted during the physical count. $$\begin{array} { | c | l | l | c | } \hline \begin{array} { l } \text { Shipping } \\\text { document }\end{array} & \begin{array} { l } \text { Date } \\\text { Shipped }\end{array} & \begin{array} { l } \text { Date } \\\text { Invoiced }\end{array} & \text { Amount } \\\hline 10,418 & 12 / 30 / 12 & 1 / 4 / 13 & \$ 10,000 \\\hline 10,419 & 1 / 2 / 13 & 12 / 30 / 12 & \$ 22,000 \\\hline 10,420 & 12 / 31 / 12 & 12 / 31 / 12 & \$ 17,000 \\\hline 10,421 & 1 / 3 / 13 & 12 / 31 / 13 & \$ 24,000 \\\hline\end{array}$$ a.Prepare the year-end adjusting entry to record the book inventory to the physical count adjustment.b.Determine the inventory items that should be recorded at year-end.Prepare the entry needed to adjust the books after reviewing the cut-off information.Adjust each invoice with an individual entry,instead of combining the entries.

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Definitions:

Defense Contractor Industry

Companies that provide products and services to military departments and agencies, including the development and manufacturing of weapons, equipment, and technology.

U.S. Defense Contractor

Companies that provide products and services to the U.S. military and national security agencies, ranging from weaponry to technology solutions.

Bargaining Power

The capacity of one party to influence the terms and conditions of an agreement in their favor during negotiations with another party.

Substitution Possibilities

The extent to which alternative products or services can replace each other in satisfying consumers' needs or preferences.