Mobile Security, Inc. (MSI) has been an audit client of Leo & Lee, LLP for the past 12 years. MSI is a small, publicly traded aviation company based in Cleveland, Ohio, where it manufactures high-tech unmanned aerial vehicles (UAV), also known as drones, and other surveillance and security equipment. MSI's products are primarily used by the military and scientific research institutions, but there is growing demand for UAVs for commercial and recreational use.MSI must go through an extensive bidding process for large government contracts. Because of the sensitive nature of government contracts and military product designs, both the facilities and records of MSI must be highly secured. In October 2025, MSI installed a new cloud-based inventory costing system to replace a system that had been developed in-house. The old system could no longer keep up with the complex and detailed manufacturing costing process that provides information to support competitive bidding. MSI's IT department, together with consultants from the software company, implemented the new inventory costing system, which went live on December 1, 2025. Key operational staff and the internal audit team from MSI were significantly engaged in the selection, testing, training, and implementation stages. The inventory costing system uses various manufacturing costing and unit of production inputs to calculate and produce a database of all product costs and recommended sales prices. It also integrates with the general ledger each time there are product inventory movements such as purchases, sales, waste, and damaged inventory losses. The following list of sales invoices are entered in the sales journal for the months of June 2026 and July 2026, respectively. All goods are shipped FOB shipping point. June July a. b. C. d. e. f. g. h. Sales Invoice Amount $30,000 20,000 10,000 40,000 100,000 $60,000 40,000 80,000 Sales Invoice Date June 21 June 30 June 29 June 30 June 30 June 30 July 2 July 3 Cost of Merchandise Sold $20,000 8,000 6,000 24,000 56,000 $40,000 23,000 55,000 Date Shipped June 29 June 20 June 30 July 3 June 30 (shipped to consignee) July 1 July 1 June 30