The Following Data Relate to Falcon Company for the Year

question 6

Multiple Choice

The following data relate to Falcon Company for the year ended December 31, 2010.Falcon Company uses the cash basis.
Sales for cash
$180,000
Sales for credit
190,000
Cost of inventory sold
210,000
Collections from customers
350,000
Purchases of inventory on credit
200,000
Payment for purchases
220,000
Selling expenses (accrual basis)
60,000
Payment for selling expenses
70,000
Which of the following amounts represents income for Falcon Company for the year ended December 31, 2010?

• A) $90,000
• B) $80,000
• C) $70,000
• D) $60,000
• E) none of the answers are correct

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Definitions:

Bond Premium

The amount by which the market price of a bond exceeds its principal amount or face value, typically occurring when the bond's interest rate is higher than the market rate.

Straight-Line Method

A method of calculating depreciation by evenly spreading the cost of an asset over its useful life.

Adjusting Entry

A journal entry made at the end of an accounting period to allocate income and expenditures to the period in which they actually occurred.