60.1K

Verified Solution

Link Copied!

2. Presented below are some business transactions that occurred during 2021 for ABC Company. The company's year-end is December 31, 2021. Instructions: For each situation below, identify the assumption, concept, constraint that has been violated, if any and why. If the Journal Entry is incorrect, prepare the entry that should have been made. If no correcting Journal Entry is required, state this and why. 1. The company purchased on account a wastebasket on December 31 at a cost of $20. The following entry was made: Office Equipment. 20 Accounts Payable. 20 2. One of the owners of ABC Company purchased a vacation property for $210,000 with company funds. The following entry was made: Property, Plant and Equipment. Cash. 210,000 210,000 3. An account receivable has been deemed a bad debt. The following entry was made: Allowance for Doubtful Accounts. 9,000 Accounts Receivable 9,000 4. In November, ABC entered into a service contract to provide maintenance services to a client for a fee of $20,000 per month. On signing the contract, the client paid Mersey a $40,000 deposit on services to be provided. The term of the contract is from December 15,2021 , through December 15,2022 . The following entry was made: Cash... 40,000 Service Revenue 40,000 5. Equipment was purchased for $8,000 from a store that is going out of business. The equipment was appraised at $10,000. The following entry was made: Equipment. 10,000 Cash. 8,000 Retained Earnings 2,000

Answer & Explanation Solved by verified expert

See Answer