Quality Auto Detailing (QAD) is your own business. You clean and touch up your customers' cars. You work from a rented garage and your customers bring their cars to you, and pick them up. You use your own cell phone to take reservations with customers. Your first month's transactions are listed below. March 7 tools from Home Depot. HST is included. You buy a one-year liability insurance policy for $2,400, plus 8% tax, March 8 paying cash. March 10 You purchase for $300 cash, plus HST, 150 colour flyers to advertise your business. You haven't used any yet. March 11 You pay a student $80 cash to distribute 50 of your flyers. You detailed one car for a customer for free, to see if he liked it March 12 and would recommend you to his friends. You would normally have charged him $100. March 15 Two more customers hire you to detail their cars. You will charge them each $300, and they each give you a deposit of $100. March 27 Business is booming! You have so far collected $2,200 in cash from happy car owners. March 28 You now have only $150 worth of supplies left. March 31 One month's rent on your garage has expired. March 27 happy car owners. March 28 You now have only $150 worth of supplies left. March 31 One month's rent on your garage has expired. March 31 You received your cell phone bill for the month. Of the $88, three-quarters (i.e. 75\%) was business 'calls. You will pay it next month. March 31 One month of your insurance policy has expired. March 31 The bank takes its monthly charge from your account, plus an additional $10 for interest on your loan. March 31 You deliver the beautiful car back to one of the March 15 customers. He will pay you his balance next week. March 31 You pay half of the balance owing on your business credit card. You will pay the rest next week. REQUIRED - Use the above information to answer all of the following questions. How will QAD record the March 1 transaction? ( 1 mark) a. No entry is needed. b. decrease Cash and increase Bank Loan Payable, $20 c. decrease Cash and increase Accounts Payable, $20 d. increase both Cash and Owner's Capital, \$20 Enter the letter that corresponds to your choice. (A B C D) How will QAD record the March 2 transaction? (1 mark) a. increase both Cash and Accounts Payable, $3,000 b. increase both Cash and Bank Loan Payable, $3,000 c. increase both Cash and Owner's Capital, $3,000 d. increase both Cash and Revenue, $3,000 e. increase both Cash and Retained Earnings, $3,000 How will QAD record the March 3 transaction? (1 mark) a. increase both Cash and Accounts Payable, $4,000 b. increase both Cash and Bank Loan Payable, $4,000 c. increase both Cash and Owner's Capital, $4,000 d. increase both Cash and Revenue, $4,000 e. increase both Cash and Retained Earnings, $4,000 Enter the letter that corresponds to your choice. ( ABCDE ) A How will QAD record the March 4 transaction? (1 mark) a. decrease Cash $3,000 and increase Rent Expense $3,000 b. decrease Cash $500 and increase Rent Expense $500 c. decrease Cash $3,000 and increase Prepaid Rent $3,000 d. decrease Cash $3,000, increase Rent Expense $3,000 e. no entry is required. Enter the letter that corresponds to your choice. (A B C D E) How will QAD record the March 6 transaction? (1 mark) a. increase both Equipment and Accounts Payable, \$452 b. increase Supplies Expense and decrease Cash, $400 c. increase Supplies and decrease Cash, $452 d. increase both Supplies Expense and Accounts Payable, \$452 e. increase both Supplies and Accounts Payable, $452 How will QAD record the March 7 transaction? (1 mark) a. increase Supplies and decrease Cash, $2,000 b. increase both Supplies Expense and Accounts Payable, $2,000 c. increase Supplies Expense and decrease Accounts Payable, \$2,000 d. increase both Supplies and Accounts Payable, $2,000 e. increase both Equipment and Accounts Payable, $2,000 f. increase Equipment and decrease Cash, $2,000 Enter the letter that corresponds to your choice. (A B C D E F). . How will QAD record the March 8 transaction? (1 mark) a. increase Prepaid Insurance and decrease Cash, \$2,592 b. increase both Insurance Expense and Accounts Payable, \$2,592 c. increase both Prepaid Insurance and Accounts Payable, \$2,592 d. increase Insurance Expense and decrease Cash, \$2,592 e. increase Prepaid Insurance and decrease Cash, $2,400 Enter the letter that corresponds to your choice. (A B C D E) How will QAD record the March 10 transaction? (1 mark) a. increase Prepaid Advertising and decrease Cash, \$339 b. increase both Prepaid Advertising and Accounts Payable, \$339 c. increase Advertising Expense and decrease Cash, $339 d. increase both Prepaid Advertising and Accounts Payable, $300 e. increase Prepaid Advertising and decrease Cash, $300 Enter the letter that corresponds to your choice. (A B C DE)
