Furniture Fix-Up is your own business. You restore and refinish antique wood furniture making the tables, chairs, desks, cabinets etc, look as good as new. You use your own car to pick up and deliver pieces, and your own cell phone to take reservations from customer. Your first month's transactions are listed below. April 1 You set up a bank account and acquire a business credit card. The bank will charge you a fee of $12 at the end of each month. April 2 You borrow $1,600 from the bank. April 3 You deposit $5,000 of your own money into the business bank account. April 4 Your parents lend you an additional $5,000. They will not charge you interest, but want to be paid back within three years. April 5 You register your business name for $60 with Service Ontario, using the business credit card. April 6 You purchase, using your business credit card, supplies (i.e. varnish, shellac) for $500 plus HST. April 7 You purchase, using your business credit card, $4,100 worth of power tools from Home Depot. HST is already included. April 8 You buy a two-year liability insurance policy for $2,400, plus 8% tax, paying cash. April 10 You purchase for $300 cash, plus HST, 600 flyers to advertise your business. You haven't used any yet. April 11 You pay a student $80 cash to distribute 400 of your flyers. April 11 You pay a student $80 cash to distribute 400 of your flyers. You fixed one chair for a customer for free, to see if he liked it and would hire April 12 you for the rest of the set. You would normally have charged him $100. Two more customers hire you to restore their dining room sets. You will charge April 15 them each $3,000 when you finish the job. They EACH give you a $1,000 cash deposit. Business is booming! You have so far collected $2,200 cash for services April 27 to happy homeowners. April 28 You now have only $250 worth of supplies left. April 29 You spent $156 from your personal funds in car expenses this month. Two-thirds of this was business travel. The business pays from the bank account. You received your cell phone bill for the month. Of the $88, half were business April 30 calls. The business will reimburse you next month. April 30 One month of your insurance policy has expired. The bank takes its monthly charge from the business bank account, April 30 plus an additional $6 for interest on your loan. April 30 You deliver the furniture to one of the April 15 customers. He will pay you his balance next week. IGNORE the effect on inventory! You April 30 pay two-thirds of the balance owing on the business credit card. You will pay the rest next month. Record the transactions into the expanded accounting equation using account names. Use that information to answer all of the following questions. Question 67 (1 point) How will FFU record the April 6 transaction? a) Increase both Supplies and Accounts Payable, $500 b) Increase both Supplies Expense and Accounts Payable, $500 C) Increase both Supplies Expense and Accounts Payable, $565 d) Increase both Supplies and Accounts Payable, $565 e) Increase both Equipment and Accounts Payable, $565 Question 68 (1 point) How will FFU classify the items purchased on April 7? a) expense Ob) supplies c) deferred revenue d) prepaid advertising e) equipment How will FFU record the April 8 transaction? a) Increase both Insurance Expense and Accounts Payable, $2,592 b) Increase Insurance Expense and decrease Cash, $2,592 c) Increase Prepaid Insurance and decrease Cash, $2,400 d) Increase Prepaid Insurance and decrease Cash, $2,592 e) Increase both Prepaid Insurance and Accounts Payable, $2,592 Question 70 (1 point) How will FFU record the April 10 transaction? a) Increase both Advertising Expense and Accounts Payable, $339 b) Increase both Prepaid Advertising and Accounts Payable, $339 c) Increase Advertising Expense and decrease Cash, $339 d) Increase Prepaid Advertising and decrease Cash, $339 e) Increase Prepaid Advertising and decrease Cash, $300