Wave Inn Is a Resort Located in Canada

question 103

Multiple Choice

Wave Inn is a resort located in Canada.Wave Inn collects cash when guests make a reservation.During December 2011, Wave Inn collected $60,000 of cash and recorded the receipt by recognizing unearned revenue.By the end of the month Wave Inn had earned one third of this amount, the other two third will be earned during January 2012.The adjusting entry required at December 31, 2011 would impact the statement of financial position by

• A)Increased Equity $40,000.
• B)Decreased Liabilities $20,000.
• C)Increased Assets $60,000.
• D)Decreased Equity $20,000.

---

Definitions:

Landed Costs

The total price of a product once it has arrived at a buyer's doorstep, including the purchase price, transportation fees, customs, duties, and other taxes.

Sales/FOB Terms

Terms used in international trade to define when and where the responsibility and ownership of goods are transferred from the seller to the buyer; "FOB" stands for Free On Board.

Commodities

Basic goods used in commerce that are interchangeable with other goods of the same type, typically used as inputs in the production of other goods or services.

Distinctives

Unique characteristics or features that differentiate a product, service, or organization from its competitors.