Touch Tronix, Inc

question 151

Multiple Choice

Touch Tronix, Inc. sells component parts to Advanced Communications, Inc. a cell phone manufacturer. During December 10, 2014, Touch Tronix, Inc. sold €1,020,000 of goods to Advanced Communications, Inc. on account for €1,320,000. Advanced Communications, Inc. was dissatisfied with 25% of the merchandise it receives due to inferior quality. On December 21, 2014, Advanced Communications, Inc. returns the goods to Touch Tronix, Inc. for credit. Which of the following is true regarding the statement of financial position and the income statement for Touch Tronix, Inc. at December 31, 2014?

• A) Assets will decrease by €75,000 and income will decrease by €75,000.
• B) Assets will decrease by €255,000 and income will decrease by €255,000.
• C) Assets will increase by €255,000 and income will decrease by €255,000. d Assets will increase by €330,000 and income will decrease by €330,000.

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Definitions:

Promissory Note

A written promise to pay a specified amount of money to a certain entity on demand or at a fixed or determinable future time.

Future Date

A specified day in the future, often related to scheduling events, deadlines, or financial transactions.

Maturity Date

The date on which a debt instrument becomes due and principal and interest payments must be paid.

Bank Credit Card

A card issued by a bank that allows users to purchase goods or services on credit, subject to repayment terms and possibly interest.