On June 1, Supertread Tire Company Entered into a Contract

question 18

Multiple Choice

On June 1, Supertread Tire Company entered into a contract to provide 100 tires per month to ZYX Cycle Company at $30 per tire for the next two years. The October shipment consisted of 100 badly defective tires. ZYX Cycle Company:

• A) can treat the whole contract as breached.
• B) can reject the October shipment if it cannot be cured in a timely manner by Supertread.
• C) cannot reject the October shipment since it is part of the installment series.
• D) must pay for the defective tires, but Supertread must provide 200 tires in November.

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Definitions:

Reverse Order

A method of organizing or sequencing items so that the last becomes first and the first becomes last.

Last-In, First-Out

An inventory management and valuation method where the most recently produced or acquired items are sold or used first.

Perpetual Inventory System

An inventory tracking system that updates the balance of inventory continuously with each sale or purchase.

Inventory Ledger

A document or system that tracks the quantities, costs, and types of a company's inventory on hand, including goods in transit and on order.