On August 7 Gideon Ridge Restaurant Purchased a Building in Exchange

question 140

Multiple Choice

On August 7 Gideon Ridge Restaurant purchased a building in exchange for a note with a face amount of $1660000.The cost of the land was $600000.The building cost $900000 and the parking lot was valued at $160000.Use the following tabular analysis to record the transaction.

• A)Increase Building and increase Notes Payable $1660000.
• B)Increase Land $600000 increase Land Improvements $160000 increase Building $900000 and increase Notes Payable $1660000.
• C)Increase Land $600000 increase Land Improvements $160000 increase Building $900000 and decrease Notes Payable $1660000.
• D)Increase Building $760000 increase Land $600000 and increase Notes Payable $1660000.

---

Definitions:

Fixed Costs

Expenses that do not change with the level of production or sales activity, such as rent, salaries, and insurance premiums.

Unit Contribution Margin

The difference between the selling price per unit and the variable cost per unit, indicating how much each unit sold contributes to fixed costs and profits.

Break-even Point

The production level at which total revenues equals total expenses, resulting in neither profit nor loss.

Mixed Cost

Expenses that have both a fixed and variable component, changing somewhat in response to changes in production volume or activity levels.