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 1 You set up a bank account and acquire a business credit card. The bank will charge you a fee of $20 at the end of each month. March 2 You borrow $3,000 from the bank. March 3 You deposit $4,000 of your own money into the business bank account. March 4 You rent a garage for the next six months for $500 per month, paying the full amount now. March 5 You register your business name for $60 with Service Ontario, using the business credit card. March 6 You purchase with your business credit card supplies (i.e. wax, touch-up paint) for $400 plus HST. March 7 You purchase with your business credit card $2,000 worth of power tools from Home Depot. HST is included. March 8 You buy a one-year liability insurance policy for $2,400, plus 8% tax, 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. March 12 You detailed one car for a customer for free, to see if he liked it 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 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

Enter the letter that corresponds to your choice. (A B C D E)

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. (A B C D E)

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

Enter the letter that corresponds to your choice. (A B C D E)

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 D E)

How will QAD record the March 11 transaction? (4 marks)

a. increase Advertising Expense and decrease Prepaid Advertising by $226 each, and also decrease Cash and increase Wages Expense by $80 each

b. increase Advertising Expense and decrease Prepaid Advertising by $113 each, and also increase Cash and decrease Wages Expense by $80 each

c. increase Advertising Expense and decrease Prepaid Advertising by $113 each, and also decrease Cash and increase Wages Expense by $80 each

d. increase Advertising Expense and decrease Prepaid Advertising by $226 each, and also increase Cash and decrease Wages Expense by $80 each

e. decrease Advertising Expense and increase Prepaid Advertising by $193 each, and also increase Cash and decrease Wages Expense by $80 each

f. increase Advertising Expense and decrease Prepaid Advertising by $226 each, and also decrease Cash and increase Wages Expense by $80 each

Enter the letter that corresponds to your choice. (A B C D E F)

How will QAD record the March 12 transaction? (1 mark)

a. increase both Cash and Service Revenue, $100

b. increase both Cash and Deferred Revenue, $100

c. increase both Accounts Receivable and Service Revenue, $100

d. increase both Accounts Receivable and Deferred Revenue, $100

e. No entry is needed.

Enter the letter that corresponds to your choice. (A B C D E)

How will QAD record the March 15 transaction? (1 mark)

a. increase both Cash and Service Revenue, $200

b. increase both Cash and Deferred Revenue, $200

c. increase both Cash and Service Revenue, $100

d. increase both Accounts Receivable and Service Revenue, $200

e. increase both Accounts Receivable and Deferred Revenue, $200

f. no entry is needed until you provide the services.

Enter the letter that corresponds to your choice. (A B C D E F)

How will QAD record the March 27 transaction? (1 mark)

a. increase both Accounts Receivable and Service Revenue, $2,200

b. increase both Accounts Receivable and Deferred Revenue, $2,200

c. increase both Cash and Service Revenue, $2,200

d. increase both Cash and Deferred Revenue, $2,200

e. No entry is needed.

Enter the letter that corresponds to your choice. (A B C D E)

How will QAD record the March 28 transaction? (1 mark)

a. increase Supplies and decrease Supplies Expense, $302

b. increase Supplies and decrease Supplies Expense, $150

c. increase Supplies Expense and decrease Supplies, $150

d. increase Supplies Expense and decrease Supplies, $302

e. increase Supplies Expense and decrease Supplies, $452

f. increase Supplies and decrease Supplies Expense, $452

Enter the letter that corresponds to your choice. (A B C D E F)

How will QAD record the March 31 rent expiry? (1 mark)

a. increase Cash and decrease Rent Expense, $500

b. increase both Accounts Payable and Rent Expense, $500

c. decrease Prepaid Rent and increase Rent Expense, $500

d. decrease Prepaid Rent and increase Rent Expense, $3,000

e. decrease Cash $500 and increase Rent Expense $500

Enter the letter that corresponds to your choice. (A B C D E)

How will QAD record the March 31 cell phone transaction? (1 mark)

a. decrease Cash $66, increase Accounts Payable $22, and increase Phone Expense $88

b. increase both Accounts Payable and Phone Expense, $66

c. decrease Cash and increase Phone Expense, $66

d. increase both Accounts Payable and Phone Expense, $22

e. decrease Cash and increase Phone Expense, $22

Enter the letter that corresponds to your choice. (A B C D E)

How will QAD record the use of the insurance on March 31? (1 mark)

a. decrease Prepaid Insurance $216 and increase Insurance Expense $216

b. decrease Prepaid Insurance $200 and increase Insurance Expense $200

c. decrease Prepaid Insurance $2,400 and increase Insurance Expense $2,400

d. decrease Prepaid Insurance $2,592 and increase Insurance Expense $2,592

e. no entry is required.

Enter the letter that corresponds to your choice. (A B C D E)

How will QAD record the bank transaction on March 31? (3 marks)

a. decrease Cash $30, decrease Bank Loan Payable $20, increase Interest Expense $10

b. decrease Cash $30, increase Bank Fees Expense $20, increase Interest Expense $10

c. decrease Cash $30, increase Interest Expense $20, decrease Bank Fees Expense $10

d. decrease Cash $30, decrease Bank Loan Payable $10, increase Bank Fees Expense $20

e. decrease cash $30, decrease Bank Loan Payable $10, decrease Retained Earnings $20

f. decrease Cash $30, decrease Bank Loan Payable $20, decrease Retained Earnings $10

Enter the letter that corresponds to your choice. (A B C D E F)

How will QAD record the detailing work on March 31? (1 mark)

a. no entry is required until the balance is paid

b. increase both Cash and Deferred Revenue, $200

c. increase both Cash and Service Revenue, $200

d. increase both Accounts Receivable and Deferred Revenue, $200

e. increase both Accounts Receivable and Service Revenue, $200

f. increase Accounts Receivable $200, increase Service Revenue $300, and decrease Deferred Revenue $100

Enter the letter that corresponds to your choice. (A B C D E F)

How will QAD record the credit card payment on March 31? (1 mark)

a. decrease both Cash and Accounts Payable $1.256

b. decrease both Cash and Accounts Payable $1,322

c. decrease both Cash and Accounts Payable $2,512

d. decrease both Cash and Accounts Payable $2,578

e. decrease both Cash and Accounts Payable $1,196

Enter the letter that corresponds to your choice. (A B C D E)

What is Total Liabilities on QAD's balance sheet for March 31? (2 marks)

What would be reported on QAD's income statement as Total Service Revenue for the month of March? (2 marks)

If you were producing the company's December 31 year end financial statements, what would be the balance in QAD's Prepaid Insurance account? (2 marks)