Consider the Following Information

question 56

Multiple Choice

Consider the following information.
(i) $20 000 of accounts payable was paid.
(ii) $100 000 from accounts receivable was received.
(iii) Inventory of $200 000 was purchased on credit.
(iv) Credit sales of $700 000 (cost of goods sold was $450 000) were made.
(v) $10 000 of prepayments expired during the month.
What is the profit for the period?

• A) $120 000
• B) $240 000
• C) $250 000
• D) none of the above.

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Definitions:

Instrument

A legal document formally recording a right, liability, or transaction.

Payment

The act of providing money or other compensation to fulfill a transaction or obligation.

Order Paper

A financial or legal document that is payable to the holder or the individual whose name appears on the document.

Endorsed

Officially approved or recommended; in finance, it refers to signing the back of a negotiable document to make it payable to someone other than the stated payee.