E13.2 Apply the concepts and principles underlying accounting. LO1 Slavko Mitrovic is one of the owners of Salami 4 U, a small business that manufactures and sells organic salami and other smallgoods. Slavko also manages the business on a part-time basis, sharing responsibilities with the other partners. Using the business cheque book by accident, Slavko recently purchased a car for his beautiful wife Natasha Mitrovic as a birthday present. Natasha is a sales representative for a large computer company and will be using the car in her job. Based on the cheque butt, the accountant recorded the transaction in the accounts of Salami 4 U as follows. Motor vehicles 20 000 Cash 20 000 (Purchase of motor vehicle) One day later, Slavko realised his error and decided to purchase some salami-making equipment worth $20 000 out of his personal account to correct his error. Not realising the transactions were linked, the accountant recorded the transaction in the accounts as follows. 20 000 Plant and equipment Owner's capital-Slavko Mitrovic (Capital contribution by owner-purchase of equipment for business by Slavko Mitrovic from personal funds) 20 000 Required a. For each of the transactions recorded above: i. Determine if they have been recorded correctly or incorrectly based on the concepts and principles that underlie the recording of accounting transactions. ii. If any transactions have been recorded incorrectly, discuss how the accounting concept(s) or principle(s) have been breached. iii. If any transactions have been recorded incorrectly, prepare BOTH the correcting entry to correct the recorded error as well as the correct journal entry that should have been recorded by the accountant in the first instance. Ignore GST. b. What if the car had been purchased for use by Slavko when he was working only in the business? Under these circumstances, explain whether the transactions have been recorded correctly or incorrectly based on the concepts and principles that underlie the recording of accounting transactions