Barry Is Both a Debtor and a Creditor of Allen

question 5

Multiple Choice

Barry is both a debtor and a creditor of Allen Ltd. At the end of the period Barry owes Allen Ltd $1400 while Allen Ltd owes him $800. Allen Ltd should record which journal entry to offset the amounts against each other?

• A) DR Accounts receivable $700; CR Accounts payable $700
• B) DR Accounts receivable $2200; CR Accounts payable $2200
• C) DR Accounts payable $800; CR Accounts receivable $800
• D) DR Accounts payable $2200; CR Accounts receivable $2200

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Definitions:

Damage Award

A compensation amount determined by a court to be paid to a plaintiff who has suffered loss or harm due to the defendant's actions.

Drudgery

Tedious, dull, or hard work that is often demeaning and exhausting.

Production

The process of creating goods and services through the combination of labor, materials, and technology.

Input Prices

The cost of resources used in the production of goods or services, such as raw materials, labor, and overhead.