You are engaged to perform an audit of the Nadir Corporation for the year ended December 31, 2021. You have decidedto perform the following cutoff test for payables and accruals. Select all items greater than P25,000 for two business daysbefore 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 Nadir's physical inventory you obtained the following cutoff information: the last receivingreport number in 2021 was 49745. Your audit work identified the following items for further investigation:Selections from the December 2021 Purchase JournalVendor NameDateRR#49472AmountExplanationP 29,875 Chemicals purchased for manufacturing process.P 45,000 Payment for consulting services for the three-monthperiod beginning December 1, 2021. The P45,000was charged to consulting expenses.P205,000 Raw materials used in the manufacturing process.12/3012/31Jeff ChemicalsNoneAbed Consulting12/3149744Britta MaterialsSelections from the January 2022 Purchase JournalVendor NameTroy TrucksPierce ProductsDateExplanationRR#4974649743AmountP75,985 Purchase of a new forklift.P42,000 Paper products used in manufacturing process.P32,450 December 2021 telephone bill01/0101/0101/02NoneGlobe Telecom, Inc.Required:For each of the six items provided in the table above, consider whether there is evidence of proper cutoff of payables andaccruals (i.e., the transaction is recorded in the proper period). If the item is not properly recorded, prepare the necessaryadjusting entries at December 31, 2021.

Adjusting Journal Entry The purpose of providing the adjusting journal entry to include all the…

Date RR# Vendor Name Amount Explanation Troy Trucks Pierce Products P75,985 Purchase of a new forklift. P42,000 Paper products used in manufacturing process. P32,450 December 2021 telephone bill 01/01 49746 01/01 49743 01/02 None Globe Telecom, Inc. 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, 2021.

Date RR# Vendor Name Amount Explanation Troy Trucks Pierce Products P75,985 Purchase of a new forklift. P42,000 Paper products used in manufacturing process. P32,450 December 2021 telephone bill 01/01 49746 01/01 49743 01/02 None Globe Telecom, Inc. 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, 2021.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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