Business transactions for Ellis Company and East Air follow:

1. Merchandise inventory worth $50,000 is acquired at a cost of $42,000 from a company going out of business. The following entry is made:

Merchandise Inventory..................................50,000

Cash......................................................................42,000

Cost of Goods Sold......................................................8,000

2. The president of Ellis Company, Evan Ellis, purchases a computer for personal use and charges it to his expense account. The following entry is made:

Office Expense ...........................................13,000

Cash......................................................................13,000

3. An asset was for recorded for the cost of advertising that appeared on television the previous month. The following entry is made:

Prepaid Advertising........................................5,000

Cash.......................................................................5,000

4. Merchandise inventory with a cost of $280,000 is reported at its fair value of $255,000. The following entry is made:

Cost of Goods Sold.......................................25,000

Merchandise Inventory................................................25,000

5. A coffee machine costing $50 is being depreciated over five years. The following adjusting entry is made:

Depreciation Expense.........................................10

Accumulated Depreciation-Equipment................................10

6. East Air sells an airline ticket for $650 in February for a trip scheduled in April. The following entry is made:

Cash...........................................................650

Service Revenue..........................................................650

Instructions

In each of the situations above, identify the concept that has been violated, if any. If a journal entry is incorrect, give the correct entry.