Question

Exercise 2-13 The following are transactions recorded by Sheffield Corp. during the current year. 1. Ordinary operating maintenance on equipment was recorded as follows: Equipment 3,400 3,400 Accounts Payable 2. Sheffield received an advance on a custom order for merchandise that will be shipped during the next accounting year. 9,000 Cash Sales Revenue 9,000 3. Sheffield Corp. is holding inventory on consignment for Rubber Ltd. Sheffield will only pay Rubber when a sale is made to a customer. Sheffield made the following entry when it received the inventory: Inventory 16,500 Accounts Payable 16,500 4. On the last day of the accounting period, a 12-month insurance policy was purchased. The insurance coverage is for the next accounting year. Insurance Expense 5,880 5,880 Cash (a2) For each transaction, if there was a violation of component of the conceptual framework (i.e., qualitative characteristic, element, or principle), give the correct journal entry that should have been initially recorded, if any. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

Answer 1

2-13)
a2:
Correct Journal Entries:
S.No.	Acc Title	Debit $	Credit $
1	Repair and Maintenance Expenses	3400
	Accounts Payable		3400
2	Cash	9000
	Unearned Revenue		9000
3	Consignment Inventory	16500
	Accounts payable		16500
4	Prepaid Insurance	5880
	Cash		5880