The company originally sold and issued 112,000 common shares During the current year 12,000 shares were repurchased from the shareholders and retired Near the end of the current year, the board of directors declared and paid a cash dividend of $7 per share The dividend was recorded as follows General JournalDebit Credit Retained earnings 784,000 Cash ($7 100,000) 700,000 Dividend income ($7 12,000) 84,000 b Carleton Builders Ltd purchased a machine that had a list price of $87,000 The company paid for the machine in full by issuing 10,000 common shares (market price $830) The purchase was recorded as follows General JournalDebit Credit Machine87,000 Share capital ($830 10,000) 83,000 Gain on purchase of equipment 4,000 c Carleton needed a small structure for temporary storage A contractor quoted a price of $781,000 The company decided to build the structure itself The cost was $548,000, and construction required three months The following entry was made General JournalDebit Credit Buildingswarehouse781,000 Cash 548,000 Revenue from selfconstruction 233,000 d Carleton owns a plant located on a river that floods occasionally A severe flood occurred during the current year, causing an uninsured loss of $97,000 (measured as the amount spent to repair the flood damage) The following entry was made General JournalDebit Credit Retained earnings, flood loss97,000 Cash 97,000 e On 28 December, the company collected $75,000 cash in advance for merchandise to be shipped in January The companys fiscal yearend is 31 December This transaction was recorded on 28 December as follows General JournalDebit Credit Cash75,000 Sales revenue 75,000 Required For each transaction, select which accounting principle was violated 1a The company originally sold and issued 112,000 common shares During the current year 12,000 shares were repurchased from the shareholders and retired Near the end of the current year, the board of directors declared and paid a cash dividend of $7 per share multiple choice 1 Revenue recognition principle and faithful representation Historical cost principle and revenue recognition Cost principle Faithful representation 1b Carleton Builders Ltd purchased a machine that had a list price of $87,000 The company paid for the machine in full by issuing 10,000 common shares (market price $830) multiple choice 2 Revenue recognition principle and faithful representation Historical cost principle and revenue recognition Cost principle Faithful representation 1c Carleton needed a small structure for temporary storage A contractor quoted a price of $781,000 The company decided to build the structure itself The cost was $548,000, and construction required three months multiple choice 3 Revenue recognition principle and faithful representation Historical cost principle and revenue recognition Cost principle Faithful representation 1d Carleton owns a plant located on a river that floods occasionally A severe flood occurred during the current year, causing an uninsured loss of $97,000 (measured as the amount spent to repair the flood damage) multiple choice 4 Revenue recognition principle and faithful representation Historical cost principle and revenue recognition Cost principle Faithful representation 1e On 28 December, the company collected $75,000 cash in advance for merchandise to be shipped in January The companys fiscal yearend is 31 December multiple choice 5 Time period and faithful representation Historical cost principle and revenue recognition Cost principle Faithful representation 2 Not available in Connect 3 In each instance, indicate how the transaction should have been originally recorded (If no entry is required for a transactionevent, select No journal entry required in the first account field)

Answer rating: 100% (QA)

ANSWER 1 Violation of Accounting Principle Journal Date Particulars Debit Credit 28 Dec Retained Earnings Ac 784000 To Cash Ac100000 7 700000 To Divid... View the full answer