Mario Responded to an Advertisement Placed by Serge in a Local

question 34

Essay

Mario responded to an advertisement placed by Serge in a local newspaper.Serge was looking for business investments,and Mario sent him a letter on October 1 that said he was willing to make Serge a partner in his tie-dyed T-shirt business if Serge was willing to put up $5,000.Serge received that letter on October 6 and wrote back the same day saying he would love to get involved in the business and would send Mario a certified cheque for $5,000 as soon as the bank had transferred the money from his savings account and certified the cheque.This letter was received by Mario on October 9,and the certified cheque was sent on October 8 and received on October 12.Meanwhile,Mario mentioned the advertisement to Sonia,and she said she would like to get into the business and would be willing to put up $8,000.Mario sent another letter to Serge,on October 4,which Serge received on October 7,saying Mario had changed his mind and would not be willing to have Serge as a partner.
-Discuss whether Mario and Serge have a contract or whether Mario is free to enter into a partnership with Sonia.

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Definitions:

Adjusting Entry

An accounting journal entry made at the end of an accounting period to allocate income and expenditures to the appropriate period.

Fiscal Period

A specific time period used for accounting purposes and financial reporting, typically a year, broken into quarters or months.

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, reflecting wear and tear, deterioration, or obsolescence.

Adjusting Entries

Journal entries made in accounting records at the end of an accounting period to update account balances before preparing financial statements.