Marlowe Company Currently Leases a Delivery Truck from Burton Enterprises

question 149

Multiple Choice

Marlowe Company currently leases a delivery truck from Burton Enterprises for a fee of $250 per month plus $0.40 per mile. Management is evaluating the desirability of switching to a modern, fuel-efficient truck, which can be leased from Goliath, Inc., for a fee of $600 per month plus $0.05 per mile. All operating costs and fuel are included in the rental fees. In general, a lease from

• A)Goliath, Inc., is economically preferable to a lease from Burton Enterprises regardless of the monthly use.
• B)Burton Enterprises is economically preferable below 1,000 miles per month.
• C)Burton Enterprises is economically preferable to a lease from Goliath, Inc., regardless of the monthly use.
• D)Burton Enterprises is economically preferable above 1,000 miles per month.

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Definitions:

Cash Receipts Journal

A financial journal that tracks all cash inflows or money received by a business, including sales, loans, and investments.

Cash Investment

Financial assets that are highly liquid and can be quickly converted into cash, or the act of placing money into financial schemes, shares, property, or a commercial venture with the expectation of achieving a profit.

Owner Recorded

The registration of assets, liabilities, or transactions by the owner in the financial records of a business.

Cash Payments Journal

A specialized accounting journal used to record all cash outflows or payments made by a business.