Harry Enters into a Contract with Sally in Which She

question 52

Essay

Harry enters into a contract with Sally in which she was to pay $50,000 for Harry's hunting cabin.All negotiations,witnessed by various third parties,stated the $50,000 figure as the sales price.When the contract was written,a typographical error was made indicating a price of $5,000.At settlement,Sally tendered $5,000 and demanded the deed per the written contract.Must Harry sell the cabin for $5,000?

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Definitions:

Depreciation Expense

An accounting method used to allocate the cost of a tangible or physical asset over its useful life.

Operating Activities

The primary revenue-generating activities of a business, including the production, sales, and delivery of the company's products and services.

Investing Activities

Part of a company's cash flow statement that shows the cash spent on investments in capital assets and any cash received from the sale of those assets.

Equipment Account

A ledger account that tracks the purchase price, depreciation, and disposal of tangible assets such as machinery and equipment used in business operations.