Final answer:
The question deals with auditing sales cutoff dates. The net effect on income for the period ended March 31, 2013, after recording the required adjustments, is an increase of 8 (in thousands of dollars). This adjustment considers the FOB destination terms and the recognition of sales when the goods reach the customer.
Step-by-step explanation:
The question pertains to auditing sales cutoff dates and determining the net effect on income due to recording adjustments. FOB (Free On Board) destination means sales should only be recognized when the goods reach the customer. According to the shipping and recording dates provided, the March 28 and 29 transactions should be recorded in March, whereas the March 30 transaction should be recorded in April. The April 2 transaction should not be recorded in March, because it will be recognized upon arrival at the destination in April. Therefore, the March 30 shipment adds revenue and cost of goods sold as an increase, whereas the April 2 transaction, which was incorrectly recorded in March, should decrease March's income.
The March 30 sale was for $77,000 with a cost of $81,000, resulting in a net decrease of $4,000 in income. The April 2 sale was for $208,000 with a cost of $220,000, which should not have been recorded in March; removing this would increase income by $12,000 (since the cost is greater than the selling price). Thus, the total net effect is an increase of $8,000 ($12,000 - $4,000).
Therefore, the correct answer is 2) an increase of 8 (in thousands of dollars).