Required:1. For each transaction, identify the inappropriate treatmentand accounting principe violated.2. Give the...Required:1. For...

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Accounting

Required:
1. For each transaction, identify the inappropriate treatmentand accounting principe violated.
2. Give the original entry should have been made.
Question a) Merchandise purchased for resale was recorded as adebit to inventory for the invoice price of $80,00; terms were2/10, n/30. Ten days later, Mawani Inc. paid the account at the netamount due, $78,400 (80,000 less the 2% discount). The $1600discount was credited to revenue. The purchased goods were stillshown in inventory at $80,000 at year end.
Question b) Mawani Inc. recorded equipment depreciation expenseof $227,000 as a debit to retained earnings and credit to theequipment account.

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4.2 Ratings (875 Votes)

1a Crediting the 1600 discount to revenue is inappropriate treatment The discount should ideally be adjusted to the cost of the inventory purchased By crediting the discount to revenue and valuing the inventory at 80000 the cost principle is See Answer

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In: AccountingRequired:1. For each transaction, identify the inappropriate treatmentand accounting principe violated.2. Give the...Required:1. For each transaction, identify the inappropriate treatmentand accounting principe violated.2. Give the original entry should have been made.Question a) Merchandise purchased for resale was recorded as adebit to inventory for the invoice price of $80,00; terms were2/10, n/30. Ten days later, Mawani Inc. paid the account at the netamount due, $78,400 (80,000 less the 2% discount). The $1600discount was credited to revenue. The purchased goods were stillshown in inventory at $80,000 at year end.Question b) Mawani Inc. recorded equipment depreciation expenseof $227,000 as a debit to retained earnings and credit to theequipment account.