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Luba_88 [7]
2 years ago
8

Cut-Rate Construction Company (CCC) begins building a restaurant for Diners Restaurants, Inc., but after two months demands an e

xtra $100,000. Diners agrees to pay. IF CCC offers, as a reason for the extra $100,000, that ordinary business expenses have increased, the agreement is:
enforceable as an accord and satisfaction
enforceable because of unforeseen difficulties
unenforceable as an illusory promise
unenforceable due to the preexisting duty rule
Business
1 answer:
oksano4ka [1.4K]2 years ago
6 0

Answer:

Enforceable because of Unforeseen Difficulties

Explanation:

Unforeseen difficulties can make Cut-Rate Construction Company (CCC) to ask for an extra financial obligation from DIners Restaurant Inc in the process of a contract between the two parties on building a restaurant

Unforeseen difficulties are difficulties that come up in a contract that no party in the contract could have foreseen. However, it becomes the basis on which a further obligation may arise which is enforceable either voluntarily by the parties involved or by a court of law, should it become a litigation issue.

Unforeseen difficulties basically allow the modification of an existing contract based on complications that may arise during the course of the performance of the contract.

In order to modify the existing contract to accommodate the unforeseen difficulties, a novation ( replace the existing with a superseding one) or a Rescission (stopping the contract before it goes further) can be applied.

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Answer:

The correct answer is B. (3,375) = NA + (3,375) NA − 3,375 = (3,375) NA.

Explanation:

The question asks for the effect of the adjusting entry on December 31, Year 1, that is, the creation of the 3% allowance for uncollectible debts.

Allowance for bad debts = 3% x $112,500 = $3,375

Its effect is as follows.

Assets: Since accounts receivable (an asset) is reduced, assets are reduced  by $3,375.

Liabilities: No effect.

Equity: As Equity = Assets - Liabilities, the net effect is to reduce the equity by $3,375.

Revenue: No effect.

Expenses: Sales worth $3,375 is written off as an expense. Hence, total expenses increase by $3,375.

Net increase: As revenue remains unchanged while expenses increase by $3,375, the net increase is a negative of $3,375.

Cash flow: No effect, because there is no exchange of cash since the amount of $3,375 was never received by Loudoun Corporation.

These entries correspond to option B. which is thus the correct answer.  

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2 years ago
Sources of monopoly power
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3 years ago
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Answer:

(a)

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