Mounder Corp

question 90

Multiple Choice

Mounder Corp. charges interest on its past due accounts receivable. A late fee of 18% per annum is added to each past due account. Mounder is preparing financial statements for the month of July and has determined there are $18,000 in past due accounts. Mounder should make an adjusting entry as follows

• A) Debiting Late Fee Revenue for $270 and crediting Accounts Receivable for $270.
• B) Debiting Accounts Receivable for $270 and crediting Late Fee Revenue for $270
• C) Debiting Late Fee Revenue for $3,240 and crediting Late Fee Receivable for $3,240.
• D) Crediting Late Fee Payable for $270 and debiting Late Fee Expense for $270.

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Definitions:

Physical

Pertaining to material aspects or phenomena of nature and the human body.

Eustress

Positive stress that is motivational and enhances one's functioning, as opposed to distress which has a negative effect.

Diligence

Characterizes careful and persistent work or effort.

Emotion

A complex psychological state involving an individual's subjective experience, physiological response, and behavioral expression.