Brooke Company Grants James Decorating Additional Time to Pay Its

question 48

Multiple Choice

Brooke Company grants James Decorating additional time to pay its past due account.James makes a written promise to pay Brooke the amount on a certain date.James records this transaction as follows:

• A)debit Notes Receivable; credit Accounts Receivable.
• B)debit Cash; credit Accounts Receivable.
• C)debit Accounts Receivable; credit Notes Receivable.
• D)debit Accounts Payable; credit Notes Payable.

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Definitions:

Price Floor

A government or regulatory-imposed minimum price that can be charged for a good or service.

Quantity Demanded

The specific amount of a good or service that consumers are willing to purchase at a given price, at a particular time.

Quantity Supplied

The total amount of a good or service that producers are willing and able to sell at a given price level in a given time period.

Equilibrium Price

The price at which the inventory of goods available meets the consumer demand in the marketplace.