Contours, Incorporated sold merchandise that cost $$6,000$ to a customer on account for $$9,000$ under terms $2/10,$ n$/30.$ Customers returned merchandise that had been sold for $$1,000.$ This merchandise had originally cost Contours $$700.$ The remaining receivables were collected after the discount period had expired. Which of the following shows how recognizing the collection of the receivables will affect the company's financial statements?

Balance Sheet Income Statement Cash Flow Statement

Assets $=$

Cash $+$ Accounts Receivable $+$ Inventory $=$ Liabilities $+$ Equity Revenue $-$ Expenses $=$ Net Income

A$.8,000+(8,000)+$ NA $=$ NA $+$ NA $8,000-$ NA $=8,0008,000$ Operating

B$.8,000+(8,000)+$ NA $=$ NA $+$ NA NA $-$ NA $=$ NA NA

C$.7,840+(7,840)+$ NA $=$ NA $+$ NA NA $-$ NA $=$ NA $7,840$ Operating

D$.8,000+(8,000)+$ NA $=$ NA $+$ NA NA $-$ NA $=$ Na $8,000$ Operating

Multiple Choice

Option B

Option C

Option D

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