Adams Company Recorded the Following Journal Entry on March 2,2018

question 191

Multiple Choice

Adams Company recorded the following journal entry on March 2,2018. From the journal entry above,identify the transaction on March 2,2018.

• A)Adams purchased goods worth $8,500 and signed a one-year note for the same amount.
• B)Adams sold goods for $8,500 cash.
• C)Adams received $8,500 for services to be performed in a later period.
• D)Adams paid $8,500 for services to be received at a later date.

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Definitions:

Annual Lease Payment

The total amount of money required to be paid each year under the terms of a lease agreement.

Direct Financing Lease

A type of lease where the lessor effectively finances the leased asset, and the lease payments are structured to cover the original cost plus a profit margin.

Sales-Type Lease

A lease agreement where the lessor earns interest income over the lease term, treating the transaction like a sale.

Dealer Profit

The margin or financial gain a dealer achieves from the buying and selling of products or securities.