Dress Designers Company Has Entered into a Contract to Design

question 94

True/False

Dress Designers Company has entered into a contract to design 10 new dresses for a customer.It will collect a total of $41,000 after the design services are complete.Dress Designers started design work on June 1.As of June 30,it finished 2 of the 10 designs.The company will make an adjusting entry at the end of June to accrue $10,250 of service revenue.

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Definitions:

Fair Market Value

The price at which property would sell for on the open market between a willing buyer and a willing seller, both having reasonable knowledge of the relevant facts.

Valid Consideration

An essential element in the formation of a contract, referring to something of value (such as goods, services, or money) exchanged by the parties that induces them to enter into the agreement.

Illusory Consideration

An apparent promise or agreement that lacks a real commitment and therefore does not form a binding contract.

Adequacy of Consideration

An evaluation of whether something of legally sufficient value has been given in exchange for a promise or action, as part of a contract.