Mini-Case Brian and Sondra Have Just Opened a New Cajun Restaurant

question 109

Multiple Choice

Mini-Case
Brian and Sondra have just opened a new Cajun restaurant on the edge of town, Cajun Cookin' Inc. They own the land and building and have a brand-new kitchen as well as a lovely seating area, filled with mementos from the South. They have a liquor license and make wonderful Southern drinks. They are quite pleased that members of the community are helping their business grow by coming in for a meal or a drink after work. They are good businesspeople who pay their bills on time and as a result have great relationships with the vendors that supply them food.
-Cajun Cookin' sits on a large landscaped lot. Brian and Sondra have a contract with Lovely Landscapes to mow the lawn and take care of the landscape. They pay $200 per month for this service. After two weeks had gone by with no service, Brian called the company only to find out that the owner and the crew had decided to take a vacation and would not be back to do the landscaping for another two weeks. Lovely Landscapes:

• A) has discharged its obligation to Brian and Sondra.
• B) is liable for specific performance.
• C) will likely have to pay Brian and Sondra damages if they decide to sue them.
• D) will not likely have to pay Brian and Sondra damages if they decide to sue them.

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Definitions:

Note Receivable

A written promise that entitles the holder to receive a specified amount of money at a set date in the future, often bearing interest.

90-Day Note

A short-term debt obligation that matures in 90 days.

Settle Account

The process of paying off or resolving a financial account or obligation.

Percent of Receivables Method

An accounting technique used to estimate the amount of a company's receivables that will not be collected.