For each transaction:

1. Determine which accounting principle, if any, was violated.
2. Explain the accounting principle briefly.
3. If there was a violation, show how the transaction should have been recorded by providing the appropriate entry.

1. The company rented parking spots to customers for $650 per year. They received $100 on the first day of the first month and then $50 on the first day on the remaining 11 months. The $100 was recorded as follows:

Cash 100

Revenue 100

2. Carleton needed a small warehouse for temporary storage. They paid cash of $625,000 for a building which was valued in the market at $650,000. The following entry was made:

Buildings warehouse 650,000

Cash 625,000

Gain on purchase of building 25,000