Kent Corp(KC),general Contractors Building a New Dorm at a University,contracted with with Fine

question 8

True/False

Kent Corp.(KC),general contractors building a new dorm at a university,contracted with Fine Rugs Inc.(FRI)to have certain grade of industrial rugs installed in the dorm.The contract price was $180,000.After the rugs were installed,KC was dissatisfied with the rug quality.FRI insisted that the rugs installed were appropriate to the contract specifications and demanded full payment.KC sends FRI a check for $120,000 which they believe is the proper value for the rugs installed and they mark the check,"Paid in Full".FRI writes "Under Protest" and deposits the check.FRI may now,in most states,successfully sue KC for the balance of $60,000.

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Definitions:

Internal Control

Processes and procedures implemented by a company to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud.

Cost Of Goods Sold

An expense measured as the direct costs attributable to the production of the goods sold by a company, including material and labor costs.

Work In Process Inventory

Items that are currently under production but have not yet reached completion.

Predetermined Overhead Rate

A rate calculated before a period begins, used to allocate indirect costs to products or services based on a chosen activity base such as labor hours or machine hours.