Krenshaw Rentals Use the Five Transactions for Krenshaw Rentals Described Below to Below

question 50

Multiple Choice

Krenshaw Rentals
Use the five transactions for Krenshaw Rentals described below to answer the questions that follows.
Oct 1 Krenshaw purchases two new saws on credit at $375 each. The saws are added to
Krenshaw's rental inventory. Payment is due in 30 days.
8 Krenshaw accepts advance deposits for tool rentals of $75.
15 Krenshaw receives a bill from Farmer's Electric Company for $150. Payment is due
in 30 days.
20 Customers are charged $750 by Krenshaw for tool rentals. Payment is due from the customers in 30 days.
31 Krenshaw receives $500 in payments from the customers that were billed for rentals on October 20.
-Refer to the transactions for Krenshaw Rentals. Based on the October 15 transaction, Farmer's Electric will record which of the following in its accounting records?

• A) A credit in Accounts Payable for $150.
• B) A credit in Accounts Receivable for $150.
• C) A debit in Accounts Payable for $150.
• D) A debit in Accounts Receivable for $150.

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Definitions:

First-in

A principle often related to inventory valuation where the earliest goods purchased or produced are the first ones to be sold or used.

Conversion

The process of changing resources into finished products, or converting prospects into customers.

Equivalent Units

A concept used in cost accounting to represent the amount of work done on partially completed goods, expressed in terms of fully completed units.

First-in

A reference often used in inventory management, indicating that the first items produced or acquired are the first ones to be sold or used.