On October 1st, the West Coast Brewery receives $300 in cash for 10 cases of bee

ID: 2333312 • Letter: O

Question

On October 1st, the West Coast Brewery receives $300 in cash for 10 cases of beer, 5 of which are delivered on the 1st. The remaining cases will be delivered in 2 weeks. The cost of each case of beer to West Coast is $10.

On October 1st, what is the change in West Coast's Assets?

+$50

+$150

+$200

+$250

+$300

$0, as the entire order has not yet been fulfilled, so no recognition can occur

On October 1st, what is the change in West Coast's Assets?

+$50

+$150

+$200

+$250

+$300

$0, as the entire order has not yet been fulfilled, so no recognition can occur

Explanation / Answer

Correct Answer ---- + $250

Explanations and Calculations

(A)

Decrease in Inventory due to sale

(10x10)

$ (50.00)

(B)

Increase in Cash

$ 300.00

(A+B)

Net increase

$ 250.00

The value of Inventory sold is (10*10) $ 100, but Inventory is reduced only by $50 since only 5 cases are sent on 1st October.

Cash is also an asset which has increased by $ 300.

Net effect on change in asset is $ 250 .

(A)