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Carleton Builders Ltd. recorded the following summarized transactions during the current year. a. The company originally sold and issued 108,000 common shares. During the current year 10,000 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 $9 per share. The dividend was recorded as follows: General Journal Retained earnings Cash ($9 x 98,000) Dividend income ($9 × 10,000) Debit Credit 972,000 882,000 90,000 b. Carleton Builders Ltd. purchased a machine that had a list price of $98,000. The company paid for the machine in full by issuing 10,000 common shares (market price = $8.90). The purchase was recorded as follows: Machine General Journal Share capital ($8.90 × 10,000) Gain on purchase of equipment Debit Credit 98,000 89,000 9,000 c. Carleton needed a small structure for temporary storage. A contractor quoted a price of $777,000. The company decided to build the structure itself. The cost was $546,000, and construction required three months. The following entry was made: General Journal Buildings-warehouse Cash Debit 777,000 Credit 546,000 231,000 Revenue from self-construction 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 $95,000 (measured as the amount spent to repair the flood damage). The following entry was made: General Journal Debit Credit 95,000 Retained earnings, flood loss95,000 Cash e. On 28 December, the company collected $73,000 cash in advance for merchandise to be shipped in January. The company's fiscal year-end is 31 December. This transaction was recorded on 28 December as follows: General Journal Debit Credit Cash 73,000 Sales revenue 73,000 Required: For each transaction, select which accounting principle was violated.

Carleton Builders Ltd. recorded the following summarized transactions during the current year. a. The company originally sold and issued 108,000 common shares. During the current year 10,000 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 $9 per share. The dividend was recorded as follows: General Journal Retained earnings Cash ($9 x 98,000) Dividend income ($9 × 10,000) Debit Credit 972,000 882,000 90,000 b. Carleton Builders Ltd. purchased a machine that had a list price of $98,000. The company paid for the machine in full by issuing 10,000 common shares (market price = $8.90). The purchase was recorded as follows: Machine General Journal Share capital ($8.90 × 10,000) Gain on purchase of equipment Debit Credit 98,000 89,000 9,000 c. Carleton needed a small structure for temporary storage. A contractor quoted a price of $777,000. The company decided to build the structure itself. The cost was $546,000, and construction required three months. The following entry was made: General Journal Buildings-warehouse Cash Debit 777,000 Credit 546,000 231,000 Revenue from self-construction 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 $95,000 (measured as the amount spent to repair the flood damage). The following entry was made: General Journal Debit Credit 95,000 Retained earnings, flood loss95,000 Cash e. On 28 December, the company collected $73,000 cash in advance for merchandise to be shipped in January. The company's fiscal year-end is 31 December. This transaction was recorded on 28 December as follows: General Journal Debit Credit Cash 73,000 Sales revenue 73,000 Required: For each transaction, select which accounting principle was violated.

Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter15: Financial Statement Analysis
Section: Chapter Questions
Problem 54E: Rebert Inc. showed the following balances for last year: Reberts net income for last year was...
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Carleton Builders Ltd. recorded the following summarized transactions during the current year. a. The company originally sold and issued 108,000 common shares. During the current year 10,000 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 $9 per share. The dividend was recorded as follows: General Journal Retained earnings Cash ($9 x 98,000) Dividend income ($9 × 10,000) Debit Credit 972,000 882,000 90,000 b. Carleton Builders Ltd. purchased a machine that had a list price of $98,000. The company paid for the machine in full by issuing 10,000 common shares (market price = $8.90). The purchase was recorded as follows: Machine General Journal Share capital ($8.90 × 10,000) Gain on purchase of equipment Debit Credit 98,000 89,000 9,000 c. Carleton needed a small structure for temporary storage. A contractor quoted a price of $777,000. The company decided to build the structure itself. The cost was $546,000, and construction required three months. The following entry was made: General Journal Buildings-warehouse Cash Debit 777,000 Credit 546,000 231,000 Revenue from self-construction 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 $95,000 (measured as the amount spent to repair the flood damage). The following entry was made: General Journal Debit Credit 95,000 Retained earnings, flood loss95,000 Cash e. On 28 December, the company collected $73,000 cash in advance for merchandise to be shipped in January. The company's fiscal year-end is 31 December. This transaction was recorded on 28 December as follows: General Journal Debit Credit Cash 73,000 Sales revenue 73,000 Required: For each transaction, select which accounting principle was violated.
Transcribed Image Text:Carleton Builders Ltd. recorded the following summarized transactions during the current year. a. The company originally sold and issued 108,000 common shares. During the current year 10,000 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 $9 per share. The dividend was recorded as follows: General Journal Retained earnings Cash ($9 x 98,000) Dividend income ($9 × 10,000) Debit Credit 972,000 882,000 90,000 b. Carleton Builders Ltd. purchased a machine that had a list price of $98,000. The company paid for the machine in full by issuing 10,000 common shares (market price = $8.90). The purchase was recorded as follows: Machine General Journal Share capital ($8.90 × 10,000) Gain on purchase of equipment Debit Credit 98,000 89,000 9,000 c. Carleton needed a small structure for temporary storage. A contractor quoted a price of $777,000. The company decided to build the structure itself. The cost was $546,000, and construction required three months. The following entry was made: General Journal Buildings-warehouse Cash Debit 777,000 Credit 546,000 231,000 Revenue from self-construction 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 $95,000 (measured as the amount spent to repair the flood damage). The following entry was made: General Journal Debit Credit 95,000 Retained earnings, flood loss95,000 Cash e. On 28 December, the company collected $73,000 cash in advance for merchandise to be shipped in January. The company's fiscal year-end is 31 December. This transaction was recorded on 28 December as follows: General Journal Debit Credit Cash 73,000 Sales revenue 73,000 Required: For each transaction, select which accounting principle was violated.
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