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During a recent month, the bookkeeper made the following entries, among others. For each, state whether the entry is correct or incorrect under US GAAP,and explain briefly. If incorrect, specify the correct entry.
1. Connor purchased manufacturing equipment, and issued a two-year note to the seller in payment. The bookkeeper debited Manufacturing Equipment, and credited Notes Payable.
2. It was determined that an account receivable from a customer was uncollectible due to the bankruptcy of the customer, and needed to be written off. The bookkeeper debited Bad Debt Expense and credited Accounts Receivable.
3. The county assessor determined that the value of the land on which Connor’s factory sits had increased by $50,000. The bookkeeper debited Land and Gain on Land for $50,000.
4. Connor repurchased shares of stock from one of its investors. The bookkeeper debited Treasury Stock and credited Cash.
5. The electric utility sent a bill for current use of electric power in the factory. The bookkeeper debited Utility Expense and credited Accounts Payable.
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