Use the Fact Situation in Q23 to Answer the Related

question 29

Multiple Choice

Use the fact situation in Q23 to answer the related question that follows. Review the fact situation above and now assume that instead of simply promising to pay B an extra $5000.00,A says,"I'll pay you an extra $5000.00 if you fix that cracked board in my fence.Also assume that B completes the job by September 1 and fixes the cracked board.
In this situation,

• A)there is still no fresh consideration from B,so A does not owe the extra $5000.00.
• B)since B completed the contract on September 1st,B is only entitled to the original price of $60 000.00.
• C)the contract did not change on June 2,so A does not owe the extra $5000.00.
• D)the promise to fix the cracked board and the fixing of it is fresh consideration and B is entitled to the extra $5000.00.
• E)the promise to fix the cracked board and the fixing of it was a gratuitous promise so B is not entitled to the extra $5000.00.

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Definitions:

Accounts Receivable

Unpaid customer dues to an enterprise for availed services or acquired goods.

Indirect Method

A technique used in cash flow statements to adjust net income for non-cash transactions and changes in working capital.

Income Statement

A financial report showing a company's revenues, expenses, and profit over a specific period.

Cash Dividends

Payments made by a corporation to its shareholders out of the company's profits.