value: 10.00 points

Carleton Builders Ltd. recorded the following summarized transactions during the current year: a. The company originally sold and issued 100,000 common shares. During the current year, 94,000 of these shares were outstanding and 6,000 were repurchased from the shareholders and retired. Near the end of the current year, the Board of Directors declared and paid a cash dividend of $8 per share. The dividend was recorded as follows:

General Journal	Debit	Credit
Retained earnings	800,000
Cash ($8 94,000)		752,000
Dividend income ($8 6,000)		48,000

b. Carleton Builders Ltd. purchased a machine that had a list price of $90,000. The company paid for the machine in full by issuing 10,000 common shares (market price = $8.50). The purchase was recorded as follows:

General Journal	Debit	Credit
Machine	90,000
Share capital ($8.50 10,000)		85,000
Gain on purchase of equipment		5,000

c. Carleton needed a small structure for temporary storage. A contractor quoted a price of $769,000. The company decided to build the structure itself. The cost was $542,000, and construction required three months. The following entry was made:

General Journal	Debit	Credit
Buildingswarehouse	769,000
Cash		542,000
Revenue from self-construction		227,000

d. Carleton owns a plant located on a river that floods occasionally. A severe flood occurred during the current year, causing an uninsured loss of $97,000 (measured as the amount spent to repair the flood damage). The following entry was made:

General Journal	Debit	Credit
Retained earnings, flood loss	97,000
Cash		97,000

e. On 28 December, the company collected $76,000 cash in advance for merchandise to be shipped in January. The companys fiscal year-end is 31 December. This transaction was recorded on 28 December as follows:

General Journal	Debit	Credit
Cash	76,000
Sales revenue		76,000

Required: For each transaction, select which accounting principle was violated. 1-a. The company originally sold and issued 100,000 common shares. During the current year, 94,000 of these shares were outstanding and 6,000 were repurchased from the shareholders and retired. Near the end of the current year, the Board of Directors declared and paid a cash dividend of $8 per share.

	Revenue principle and representational faithfulness
	Cost principle and revenue recognition
	Cost principle
	Representational faithfulness

1-b. Carleton Builders Ltd. purchased a machine that had a list price of $90,000. The company paid for the machine in full by issuing 10,000 common shares (market price = $8.50).

	Revenue principle and representational faithfulness
	Cost principle and revenue recognition
	Cost principle
	Representational faithfulness

1-c. Carleton needed a small structure for temporary storage. A contractor quoted a price of $769,000. The company decided to build the structure itself. The cost was $542,000, and construction required three months.

	Revenue principle and representational faithfulness
	Cost principle and revenue recognition
	Cost principle
	Representational faithfulness

1-d. Carleton owns a plant located on a river that floods occasionally. A severe flood occurred during the current year, causing an uninsured loss of $97,000 (measured as the amount spent to repair the flood damage).

	Revenue principle and representational faithfulness
	Cost principle and revenue recognition
	Cost principle
	Representational faithfulness

1-e. On 28 December, the company collected $76,000 cash in advance for merchandise to be shipped in January. The companys fiscal year-end is 31 December.

	Time period and representational faithfulness
	Cost principle and revenue recognition
	Cost principle
	Representational faithfulness

2. Not available in Connect. 3. In each instance, indicate how the transaction should have been originally recorded. (If n