Ace Computers (AC)is a Manufacturer

question 40

Multiple Choice

Ace Computers (AC) is a manufacturer.It entered into a contract with a retailer,Reliable Computer (RC) for the sale of 100 new XYZ model computers at $1,000 each,for delivery in six months.AC would thus make a profit of $50,000.Six months later however,the XYZ model has become almost relatively obsolete;its market price is only $600 at that time.RC refuses to accept or pay for those computers.If AC sues,how much should it be entitled to in damages? (Ignore any incidental expenses or cost savings to AC. )

• A)Nothing;when the XYZ model became almost obsolete,this excused RC from the contract.
• B)$50,000,the profit AC would have made had RC not breached the contract.
• C)$40,000,the difference between market price and contract price.
• D)$90,000,the lost profit plus the difference between market price and contract price.

Prepare adjusting journal entries to estimate bad debts based on aging analysis.

Understand the direct write-off method and its implications on the matching principle.

Calculate and interpret the accounts receivable turnover ratio.

Understand the receivables management, including the sale of receivables and estimating bad debts.

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Definitions:

USPS

The United States Postal Service, an independent agency of the federal government responsible for providing postal service in the United States.

Top-Level Managers

Executives responsible for overseeing the strategic direction and decision-making of an entire organization, ensuring its long-term success and growth.

Strategic Objective

A specific, measurable goal that an organization aims to achieve to fulfill its long-term strategy.

Short-Term Bonuses

financial incentives provided to employees on a non-annual basis to encourage performance or reward achievements.