Two independent situations are described below:

Transaction 1:

The owner of KPG Textiles often used the company credit card for dry cleaning of his own clothes. He claimed that these are business expenses because he must wear good clothes in order to present himself well. He advised the accountant to record $1,000 that he paid for dry cleaning as other expenses of the business.

Transaction 2:

Kapton Silvers, the owner of Care Rental Pty Ltd, wanted to make the companys income statement looks even better. He advised the accountant to record $50,000 received on 1^st June 2020 as rent in advance from tenants for forthcoming five months (July to November 2020) as rental income for the year ended 30^th June 2020.

REQUIRED

For each of the above situation:

1. Identify if any accounting concept or principle has been violated. If so, briefly explain the relevant concept or principle and why such a principle may have been breached. (Word limit: 50 words for less)

2. Assuming transactions 1 and 2 above are in breach of accounting concepts/principles provide the correct journal entries that comply with such principles/concepts. (Narrations not required).