Presented below are some business transactions that occurred during 2004 for Sammy Sosa Company. LO2

(a) Merchandise inventory with a cost of $208,000 is reported at its market value of

$260,000. The following entry was made.Merchandise Inventory 52,000 Gain 52,000 Equipment 60,000 Cash 46,000 Gain 14,000 Travel Expense 18,000 Cash 18,000 Depreciation Expense—Pencil Sharpener 10 Accumulated Depreciation—Pencil Sharpener 10

(b) Equipment worth $60,000 was acquired at a cost of $46,000 from a company that had water damage in a flood. The following entry was made.

(c) The president of Sammy Sosa Company, Charles Brieschke, purchased a truck for personal use and charged it to his expense account. The following entry was made.

(d) An electric pencil sharpener costing $50 is being depreciated over 5 years. The following entry was made.

Instructions In each of the situations above, identify the assumption, principle, or constraint that has been violated, if any. Discuss the appropriateness of the journal entries, and give the correct journal entry, if necessary.