Jenson and Johnson Enter into a Contract That Involves Johnson

question 35

Multiple Choice

Jenson and Johnson enter into a contract that involves Johnson paying Jenson $1,000 for shoveling the snow from his driveway throughout winter. Jenson, who was paid before work commenced, materially breached some of the conditions of the contract on the very first day. He should refund $1,000 to Johnson as ________.

• A) compensatory damages
• B) restitution
• C) liquidated damages
• D) consequential damages

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Definitions:

Credit Sales

Sales for which payment is not received at the time of sale but is expected to be paid at a later date.

Budgeted Accounts Receivable

Forecasted or estimated amounts that a business expects to receive from customers for credit sales.

Credit Sales

Sales made by a business where payment is delayed as per agreed terms, allowing the customer to pay at a later date.

Cash Budget

A forecast of cash inflows and outflows for a business or individual for a specific period of time.