Stella, Inc

question 32

Multiple Choice

Stella, Inc. purchased 75 telescopes for $25 each from Luna Co. When they unpacked the telescopes, Stella found that 20 of the telescopes were damaged in shipping. Luna offers to take them back, or provide an allowance of $300. How would the journal entries differ if Stella chose to take the allowance instead of return the telescopes?

• A)The company would debit the Allowance account instead of Purchase Returns.
• B)The company would debit and credit the same accounts, but for a greater amount.
• C)The company would debit and credit the same accounts, but for a lesser amount.
• D)There would be no difference in journal entries.

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Definitions:

Type A Personality

A temperament characterized by high levels of competitiveness, impatience, aggression, and a constant sense of urgency.

Competitive

The trait of being inclined to strive for success or superiority over others, often motivated by the desire to win or be the best at something.

General Adaptation Syndrome

A theoretical model describing the body's stress response in three stages: alarm, resistance, and exhaustion.

Exhaustion Phase

The exhaustion phase is the final stage of the General Adaptation Syndrome, where the body's resources are depleted following prolonged exposure to stress, leading to decreased stress tolerance and possible health issues.