Crimmins Boats Paid a $350 Cheque to a Supplier for the Balance

question 75

Multiple Choice

Crimmins Boats paid a $350 cheque to a supplier for the balance due on an account payable. The transaction was erroneously recorded as a credit to Cash of $530 and a debit to Repairs Expense of $530. The correcting entry is

• A) debit Accounts Payable $350; credit Cash $350
• B) debit Accounts Payable $180; credit Cash $180
• C) debit Cash $180; debit Accounts Payable $350, credit Repairs Expense $530
• D) debit Cash $350; debit Accounts Payable $180 credit Repairs Expense $530

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Definitions:

Fixed Manufacturing Overhead

Costs that do not vary with the level of production, such as rent, salaries, and equipment depreciation, associated specifically with manufacturing.

Financial Advantage

The benefit gained in financial terms, which can result in better profitability or cost savings.

Fixed Manufacturing Expenses

Costs associated with production that do not vary with the level of output, including salaries of permanent staff and depreciation of machinery.

Fixed Selling

Refers to the selling expenses that do not change with the level of sales.