Presented below are some business transactions that occurred during 1996 for Marietta Co.

(a) Merchandise inventory with a cost of \(\$ 208,000\) is reported at its market value of \(\$ 260,000\). The following entry was made:

(b) Equipment worth \(\$ 90,000\) was acquired at a cost of \(\$ 72,000\) from a company that had water damage in a flood. The following entry was made:

(c) The president of Marietta Corp., George Winston, purchased a truck for personal use and charged it to his expense account. The following entry was made:

(d) An electric pencil sharpener costing \(\$ 50\) is being depreciated over 5 years. The following entry was made:

\section*{Instructions}
In each of the situations above, identify the assumption, principle, or constraint that has been violated, if any, and discuss the appropriateness of the journal entries. Give the correct journal entry, if necessary.

Transcribed Image Text:

Merchandise Inventory Gain 52,000 52,000