Giorgio Italian Market Bought $4,000 Worth of Merchandise from Food

question 160

Multiple Choice

Giorgio Italian Market bought $4,000 worth of merchandise from Food Suppliers and signed a 90-day,6% promissory note for the $4,000.Food Supplier's journal entry to record the collection on the maturity date is: (Use 360 days a year.)

• A)Debit Cash $4,060; credit Notes Receivable $4,060
• B)Debit Notes Receivable $4,000; credit Cash $4,000
• C)Debit Cash $4,000; debit Interest Receivable $60; credit Sales $4,060
• D)Debit Notes Receivable $4,060; credit Sales $4,060
• E)Debit Cash $4,060; credit Interest Revenue $60; credit Notes Receivable $4,000

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Definitions:

Overapplied Overhead

A situation where the allocated manufacturing overhead costs are more than the actual overhead costs incurred.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to individual units of production.

Factory Overhead

The indirect costs involved in manufacturing beyond direct materials and labor costs, including expenses like equipment maintenance, utilities, and factory management salaries.

Machine Hours

Machine hours refer to the total time that a piece of machinery or equipment is operated within a specific period, often used as a basis for allocating manufacturing overhead costs.