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vivado [14]
2 years ago
3

Ted, a used car dealer, entered into a written agreement to sell a car to Debra, a sixteen year old high school junior. The agre

ement provided that Ted would replace any defective parts for one year. Debra agreed to pay Ted $200 per month for three years (which she has done). The age of majority for the jurisdiction is eighteen. After six months, Debra's transmission fails but Ted refuses to replace it. If Debra (or a representative on her behalf) brings a lawsuit against Ted, it is more likely than not that the court will rule:_____.
A. Ted will prevail because Debra was a minor when the contract was formed.
B. The contract is illegal.
C. The contract is void.
D. Debra will prevail, as Ted is bound to the contract.
Business
1 answer:
GenaCL600 [577]2 years ago
6 0

Answer:

D. Debra will prevail, as Ted is bound to the contract.

Explanation:

A minor can enter a contract that is not prohibited by law for minors. For example sale of alcohol or tobacco is prohibited.

When a minor enters a contract they can either honor it or void it before they come of age.

This is different for adults that cannot disaffirm a contract.

So in this scenario where the agreement provided that Ted would replace any defective parts for one year, failure to do so will see Debra prevailing in court. Since she did not void the contract

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Lonergan Company occasionally uses its accounts receivable to obtain immediate cash. At the end of June 2021, the company had ac
n200080 [17]

Answer:

1.

ALTERNATIVE A

01-Jul

Dr Cash $570,000

Cr Notes Payable $570,000

ALTERNATIVE B

01-Jul

Dr Cash 601,400

Dr Loss on sale of receivables $18,600

Cr Accounts Receivables $620,000

2.

ALTERNATIVE A

Dr Cash $644,000

Cr Notes Payable $644,000

Dr Interest Expense $4,750

Dr Notes Payable 570,000

Cr Cash 574,750

ALTERNATIVE B

Dr Cash $210,000

Cr Accounts Receivable $210,000

Explanation:

1. Preparation of the journal entries that would be recorded on July 1 for alternative a and

alternative b.

ALTERNATIVE A

01-Jul

Dr Cash $570,000

Cr Notes Payable $570,000

(Notes payable collected)

ALTERNATIVE B

01-Jul

Dr Cash 601,400

($620,000-$18,600)

Dr Loss on sale of receivables $18,600 (3%*$620,000)

Cr Accounts Receivables $620,000

(Remittance to bank)

2. Preparation of the necessary journal entries to record the collection and the remittance to the bank for alternative a and

alternative b.

ALTERNATIVE A

Dr Cash (920,000 x 70%) $644,000

Cr Notes Payable $644,000

Dr nterest Expense($570,000 x 10%x 1/12) $4,750

Dr Notes Payable 570,000

Cr Cash 574,750

($570,000+$4,750)

ALTERNATIVE B

Dr Cash [ (920,000 -620,000)x 70%] $210,000

Cr Accounts Receivable $210,000

7 0
2 years ago
Brief Exercise 5-8 Cullumber Company has a unit selling price of $630, variable costs per unit of $300, and fixed costs of $327,
IRISSAK [1]

Answer:

(a)

Mathematical Equation for break-even

F = QP - QV

Where

F = fixed cost

Q = Break-even quantity

P = Selling price

V = Variable cost

F = Q ( P - V )

Q = F / ( P - V )

Q = $327,030 / ( $630 - $300 )

Q = $327,030 / $330

Q = 991 units

(b)

Contribution Margin = Price per unit - Variable cost per unit

Contribution Margin = $630 - $300 = $330

Break-even Point in Units = Fixed Cost / Contribution margin per unit

Break-even Point in Units = $327,030 / $330 = 991 units

Explanation:

Mathematical equation use the the break-even equation which represent the behavior of each element towards the break-even point.

Contribution per unit method use the contribution of each unit to calculate the break-even point.

5 0
2 years ago
Littleton Books has the following transactions during May. May 2 Purchases books on account from Readers Wholesale for $4,200, t
lidiya [134]

Answer:

Explanation:

The journal entries are shown below:

On May 2:

Purchase A/c Dr $4,200

     To Accounts Payable A/c $4,200

(Being purchase is made on credit)

On May 3:

Freight Inward A.c Dr $290

    To Cash A/c                     $290

(Being freight expenses are paid in cash)

On May 5:

Accounts payable A/c  Dr $350

      To Purchase return               $350

(Being purchase return is recorded)

On May 10:

Accounts payable A/c  Dr $3,850

                      To Cash A/c             $3,773

                      To Discount             $77

(Being full amount is paid and the remaining balance is credited to the cash account)

The discount is computed below:

= (Purchase - purchase return) × discount rate

= ($4,200 - $350) × 2%

= $3,850 × 2%

= $77

On May 30:

Accounts receivable A/c Dr  $4,900

     To  Sales revenue                       $4,900

(Being sales is recorded)

5 0
2 years ago
Information related to Kerber Co. is presented below.1. On April 5, purchased merchandise from Wilkes Company for $23,000, terms
Travka [436]

Answer and Explanation:

The journal entries are as follows

1. On April 5

Merchandise Inventory $23,000

           To Accounts Payable  $23,000

(Being the merchandise purchased on the account is recorded)

For recording this we debited the merchandise inventory as it increased the assets and credited the account payable as it increased the liabilities

2. On April 6

Merchandise Inventory $900

         To Cash  $900

(Being freight cost is paid is recorded)

For recording this we debited the merchandise inventory as it increased the assets and credited the cash as it decreased the assets

3. On April 7

Equipment $26,000

        To Accounts Payable  $26,000

(Being equipment purchased on the account is recorded)

For recording this we debited the equipment as it increased the assets and credited the account payable as it increased the liabilities

4. On April 8

Accounts Payable $3,000

         To Merchandise Inventory  $3,000

(Being returned inventory is recorded)

For recording this we debited the account payable as it decreased the liabilities and credited the merchandise inventory as it decreased the assets

5. On April 15

Accounts Payable ($23,000 - $3,000) $20,000

        To Cash  $19,600

        To Merchandise Inventory ($20,000 × 2%)  $400

(Being payment is made is recorded)

For recording this we debited the account payable as it decreased the liabilities and credited the merchandise inventory and cash as it decreased the assets

3 0
2 years ago
The core revenue principle states that
Nastasia [14]

Answer:

B

Explanation:

Companies recognize revenue when goods or services are transferred to customers for the amount the company expects to be entitled to receive in exchange for those goods or services.

8 0
2 years ago
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