Describe, in general terms, the audit procedures you would follow in making sure that cutoff for sales is accurate at the balance sheet date.

Makoto Auto Parts sells new parts for foreign automobiles to auto dealers. Company policy requires that a prenumbered shipping document be issued for each sale. At
the time of pickup or shipment, the shipping clerk records the date on the shipping document.
The last shipment made in the fiscal year ended August 31, 2019, was recorded on document 2167. Shipments are billed in the order that the billing clerk receives the shipping documents.
For late August and early September, shipping documents are billed on sales invoices
as follows:
Shipping Document No. Sales Invoice No.
2163 5437
2164 5431
2165 5432
2166 5435
2167 5436
Required
Chapter 16 / COMPLETING THE TESTS IN THE SALES AND COLLECTION CYCLE: ACCOUNTS RECEIVABLE 565
Shipping Document No. Sales Invoice No.
2168 5433
2169 5434
2170 5438
2171 5440
2172 5439
The August and September sales journals have the following information included:
SALES JOURNAL—AUGUST 2019
Day of Month Sales Invoice No. Amount of Sale
30 5431 $ 726.11
30 5434 4,214.30
31 5432 419.83
31 5433 1,620.22
31 5435 47.74
SALES JOURNAL—SEPTEMBER 2019
Day of Month Sales Invoice No. Amount of Sale
1 5437 $2,541.31
1 5436 106.39
1 5438 852.06
2 5440 1,250.50
2 5439 646.58
a. What are the accounting requirements for a correct sales cutoff?
b. Which sales invoices, if any, are recorded in the wrong accounting period? Prepare an adjusting entry to correct the financial statement for the year ended August 31, 2019.
Assume that the company uses a periodic inventory system .
c. Describe, in general terms, the audit procedures you would follow in making sure
that cutoff for sales is accurate at the balance sheet date.
d. Identify internal controls that will reduce the likelihood of cutoff misstatements.
How would you test each control?

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