Reference no: EM132959279

Question - As part of your continuing professional development as a graduate accountant of JLL accounting Pte Ltd, the managing partner (Janelle ledger) has asked you to review the following individual cases of clients violating at least one accounting assumption, the concept or definition of business accounting that you studied at university.

The Managing Partner (Janelle Ledger) has again asked that you prepare your explanations in the form of a formal business letter addressed to her (not the clients). If she is satisfied with your explanations, this letter will then be used as the basis of a response to these clients. In your letter, you need to provide the following for each of the three separate cases:

Explain the main accounting concept or assumption that has been violated, and;

Describe what the correct treatment should be in each case.

Write three cases as a business letter, not a form.

1. Luke, the owner of a market garden, paid for repairs to the gutters of his home using the business bank account. He recorded this as a debit to Maintenance Expense and credit to Cash at Bank in the business accounts.

2. Han, the owner of a transport business, is aware that the loss of large sums of money is probable because several customers were close to bankruptcy. The customers concerned probably would not be able to pay their debts. Han has decided that no allowance should be made because the losses have not yet occurred.

3. Leia, the owner of a small bakery specialising in large, cinnamon rolls, recorded the entire cost of a new oven to an expense account in the year the oven was purchased. Leia believes that the oven will be useful to her for 7 years.