On May 1,Suneel Entered into a Contract with Mathilde

question 35

Essay

On May 1,Suneel entered into a contract with Mathilde.She promised to deliver a widget to him on June 1 and he promised to pay the total purchase price of $10 000 on July 1.As June 1 approached,however,Suneel began to worry about giving possession of the widget to Mathilde without getting paid at the same time.He therefore wants to exercise a lien.Is he entitled to do so? Would your answer be different if Mathilde became insolvent before June 1? Explain your answers.

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Definitions:

Balance Sheet

A financial summary showing a company's assets, liabilities, and equity from shareholders at a designated time.

Prepared

The state of being ready for a specific event, action, or process, often involving prior planning or setup.

Unearned Fees

Income received by a company for services yet to be performed or goods to be delivered, recognized as a liability on the balance sheet until earned.

Current Liability

Obligations or debts that a company expects to settle within one fiscal year or the operating cycle, whichever is longer.