The following are transactions which were recorded in the books of CHESTNUT INTERIORS Inc. during the past year.

For each transaction,i) State and explain one principle or element from the conceptual framework that was violated by relating it to details with in the situation. (Hint: Do not be vague).Do not use "full disclosure"; or "free from error"; or. use the same principle or element more than once ii) Give the entry(ies) to correct/adjust the books assuming that it is now the company's year end at December 31, 2020.

1. The government is considering that employers such as Chestnut be required to have additional virus protection equipment on site. At the present time, Chestnut has been complying with only the minimum current requirements as this equipment is costly.In anticipation of this legislation being passed next year, Chestnut has booked the following entry:

Employee safety expense 95,000Employee safety liability95,000

2. Due to a burst pipe in December, the company's water charge for the month was ten times what it normally is. Wanting to avoid a large variation in their operating expenses, the company has capitalized the charge which it will expense over the coming month when it hopes to offset the costs by using less water in the future.

Prepaid utilities 7,000Accounts payable7,000

3. Given the tough economic times, Chestnut estimates that 5% of the accounts receivable balance of S100,000 will be uncollectable.The balance in the AFDA is a credit of $1,000 and company has not made any additional entries because they will not know for sure until the end of January.

No entry

4. Given that Chestnut had poor performance in the latter part of the year, closing the books at December 31 was held off until the company could record a few months of positive performance.The revenues at December 31 were $511,000 and expenses were $779,000.No dividends had been declared. (For simplicity, do not adjust for any correction that might be necessary for the previous for corrections)

No entry