QUESTION 1 R. Sparks, an interior decorator, started a business by investing $10,000 cash. The business would record this transaction: Debit Cash $10,000, Credit Revenue $10,000 Debit Cash $10,000, Credit Common Stock $10,000 Credit Cash $10,000, Debit Common Stock $10,000 Credit Cash $10,000, Debit Revenue $10,000 QUESTION 2 R Sparks business purchases a used car for $6,000 cash. The business would record this transaction: Debit Car expense $6,000, Credit Cash $6,000 Debit Cash 6,000, Credit Car expense $6,000 Debit Assets: Car $6,000, Credit Cash $6,000 Debit Cash $6,000, Credit Assets: Car $6,000 QUESTION 3 R. Sparks business purchases a one year liability insurance policy effective immediately for $1,200 cash. The business would record this transaction: Debit Asset: Prepaid insurance $1,200, Credit Cash $1,200 Debit Insurance expense $1,200, Credit Cash $1,200 Debit Cash $1,200, Credit Prepaid Insurance $1,200 Debit Cash $1,200, Credit Insurance Expense $1,200 QUESTION 4 R. Sparks business purchases six months of supplies on account for $550. The business would record this transaction: Debit Supplies Expense $550, Credit Cash $550 Debit Supplies Expense $550, Credit Accounts Payable $550 Debit Asset: Supplies $550, Credit Cash $550 Debit Asset: Supplies $550, Credit Accounts Payable $550 QUESTION 5 R. Sparks business billed customers $2,100 for services performed. The business would record this transaction: Debit Accounts Receivable $2,100, Credit Service Revenues $2,100 Debit Cash $2,100, Credit Service Revenues $2,100 Debit Service Revenues $2,100, Credit Cash $2,100 Debit Service Revenues $2,100, Credit Accounts Receivable $2,100 QUESTION 6 R. Sparks withdrew from his business $300. The business would record this transaction: Debit Cash $300, Credit Withdrawals $300 Debit Withdrawals $300, Credit Cash $300 Debit Withdrawals expense $300, Credit Cash $300 Debit Cash $300, Credit Accounts Payable $300 QUESTION 7 R. Sparks business received payment from customers previously billed $1,000. The business would record this transaction: Debit Cash $1,000, Credit Accounts Receivable $1,000 Debit Cash $1,000, Credit Accounts Payable $1,000 Debit Accounts Receivable $1,000, Credit Service revenue $1,000 Debit Service revenue $1,000, Credit Cash $1,000. QUESTION 8 R. Sparks business received $800 cash in advance for services to be performed next quarter. The business would record this transaction: Debit Accounts Receivable $800, Credit Unearned Revenue $800 Debit Cash $800, Credit Earned Revenue $800 Debit Cash $800, Credit Unearned revenue $800 Debit Unearned revenue $800, Credit Cash $800 QUESTION 9 R. Sparks business had purchased office supplies for $1,000 and had recorded the purchase as Asset: Office Supplies. At month end, when preparing the financial statements, an inventory shows that $700 of Office Supplies is still on hand. The business would record an adjusting entry for this transaction: Debit Office Supplies expense $700, credit Asset: Office Supplies $700 Debit Office Supplies expense $300, credit Asset: Office Supplies $300 Debit Asset: Office Supplies $700, Credit Office Supplies expense $700 Debit Asset: Office Supplies $300, Credit Office Supplies expense $700 QUESTION 10 R. Sparks business had purchased a one year insurance policy for $1,200. The business had recorded the cost of $1,200 to the asset: Prepaid Insurance. An adjusting entry for the one month expiration of insurance would be: Debit Prepaid Insurance $1,200, Credit Cash $1,200 Debit Prepaid Insurance $1,200, Credit Insurance expense $1,200 Debit Insurance expense $100, Credit Prepaid Insurance $100 Debit Prepaid Insurance $100, Credit Insurance expense $100