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1. Assets total $100,000 and liabilities total $20,000. What isthe equity of the business?  
   1. $800  
   2. $8,000  
   3. $80,000  
   4. $88,000
   5. None of the above
2. If during the accounting period the assets decreased by$10,000, and equity increased by $2,000, then how did liabilitieschange?  

1. Increased by $12,000  
2. Increased by $8,000  
3. Decreased by $12,000
4. Decreased by $8,000  
5. Decreased by $6,000

3. If during the accounting period the assets increased by$14,000, and equity increased by $4,000, then how did liabilitieschange?  

1. Increased by $10,000  
2. Increased by $4,000  
3. Decreased by $4,000
4. Decreased by $10,000  
5. Decreased by $18,000

4. Purchasing equipment on account will have what effect on theaccounting equation?  

1. Increase in equipment and a decrease in equity  
2. Increase in equipment and an increase inequity  
3. Increase in equipment and an increase inliabilities  
4. Increase in equipment and a decrease inliabilities  
5. None of the above

5. Services rendered for which cash has not yet been received willhave what effect on the components of the accountingequation?  

1. Increase in accounts receivable and a decrease inequity  
2. Increase in accounts receivable and an increase inequity  
3. Decrease in accounts receivable and an increase inequity  
4. Increase in fees earned and a decrease inequity  
5. Decrease in accounts receivable and a decrease in equity

6. Problem #1 Professor Quark opens his owncompany, Electronic Tutorial Services, and completes the followingtransactions in June:

• 6/1 Quark invests $12,000 into the business.
• 6/3 Purchased $1,800 of equipment on account.
• 6/4 Paid $360 for a two-year insurance policy.
• 6/6 Purchased office supplies for cash, $300.
• 6/9 Purchased a new computer for $7,500. Paid $1,500 cashagreed to pay the remainder in 30 days.
• 6/10 Billed student Fiona Smith $40 for tutorial services thatwere performed.
• 6/14 Paid for the equipment purchased on June 3rd.
• 6/25 Received $35 cash from student Bert Bantrum for tutorialservices performed.
• 6/30 Student billed on June 10 pays the amount due toQuark.
• 6/30 Quark withdraws $500 for personal use.

Required: Prepare the journal entries to record thesetransactions. How much cash did Professor Quark have at the end ofJune?

7. Problem #2 Maria Sanchez started the MerryMowers lawncare business. She began operations on May 1st andcompleted the following transactions, which included her initialinvestment of $8,000 cash. After these transactions, the ledgerincluded the following accounts with normal balances.

• Cash $ 9,440     
• Office Supplies500        
• Equipment 3,000     
• Accounts Payable500        
• Notes Payable 2,000     
• Maria Sanchez, Capital 8,000     
• Lawncare Revenue 3,200     
• Gas and Oil Expense210        

Required: Prepare a balancesheet and income statement for this business at the end ofMay.

8. Problem #3 Below are accounts listed forSeptember for PC Partners, a company that installs/repairs homecomputers for customers. The business is owned by Ed Connor. Theaccounts are listed in alphabetical order. For the month ofSeptember, prepare an income statement and a balance sheet.

ACCOUNT BALANCE

Accounts Payable 4,200

Accounts Receivable 8,480

Advertising expense 420

Capital (Ed Connor) at 08/31/0456,000

Cash 35,460

Entertainment Expense 600

Equipment 15,700

Installation Revenue 15,600

Miscellaneous Revenue 800

Photocopying Expense 150

Rent Expense 1,300

Repair Revenue 8,650

Supplies 8,400

Truck 8,500

Unearned Revenue 760

9. At the end of the accounting period, the business had $4,500 ofoffice supplies on hand. At the beginning of the period, the amountof supplies on hand was $3,000. If the business purchased $12,000of office supplies during the year, what amount of office supplieswere used during year?

1. $16,500  
2. $14,250  
3. $10,500  
4. $ 9,750  
5. None of the above

10. Zach LLP wrote a check to pay an advertising bill for servicesfor the next month. What is the entry?
    1. Debit – Loan Note Payable, Credit – Cash
    2. Debit – Cash, Credit – Account Payable
    3. Debit – Prepaid Advertising, Credit – Cash
    4. Debit – Cash, Credit – Advertising Expense