Question $13$ options:

In this section, marks are indicated for each question. There are $30$ marks in total.

The Cat Lady is a new business you started this year. When your customers are on vacation, you visit their homes and see that their cats are fed and healthy, and you play with them and clean their litter boxes.

You use your own car to get to customers' homes and your own cell phone to speak to your customers.

Your first month's transactions are listed below.

$01-$Oct You set up a business bank account and get a business credit card.

The bank will charge a fee of $$10$ at the end of each month.

$02-$Oct You deposit $$2,000$ of your own money into the business bank

account to start the business.

$03-$Oct You borrow $$1,200$ from the bank.

$04-$Oct You register your business name for $$60$ with Service Ontario,

using the business credit card.

$06-$Oct You purchase, using the business credit card, ten cat toys for $$200$ plus HST$.$

You expect the toys to last more than a year.

$07-$Oct You purchase, using the business credit card, $20$ kilograms

of kitty litter for $$400$ plus HST$.$

$08-$Oct You buy a one$-$year liability insurance policy for $$1,500,$ plus $8\%$ tax,

paying cash.

$10-$Oct You purchase for $$200$ cash, plus HST$,$ flyers to advertise your business.

None of the flyers have been delivered yet.

$11-$Oct You pay a student $$50$ cash to deliver all your flyers to

the homes in your area.

$12-$Oct You visited your first cat on the Thanksgiving weekend.

Because this is your first customer you provide your services for free

instead of charging her your usual $$40$ fee!

$15-$Oct Two more customers hire you for the upcoming Christmas holidays.

They EACH pay you $$20$ now to reserve your services.

$27-$Oct Business is purring! You have provided services to $30$ customers

and collected $$1,200$ in cash.

$28-$Oct You now have only $5$ kilograms of kitty litter left.

All the remainder has been used.

$29-$Oct You spent $$156$ from your personal funds in car expenses this month.

One$-$third of this was business travel and the business pays you cash

from the business bank account.

$30-$Oct You received your cell phone bill for the month of October.

Of the $$88,$ half were business calls. The company will

reimburse you the amount owed next month.

$31-$Oct You have used up $1$ month of insurance coverage.

$31-$Oct The bank takes its monthly charge from the business bank account,

plus an additional $$5$ for interest on your loan.

$31-$Oct You visited your first customer's black cat on Halloween.

The customer will pay you the $$40$ in November.

$31-$Oct You pay the entire balance owing on the business credit card.

REQUIRED $-$ Use the above information to answer all of the following questions.

How will Cat Lady record the October $1$ transaction? $(1$ mark$)$

a$.$ No entry is needed.

b$.$ decrease Cash and increase Bank Loan Payable, $$10$

c$.$ decrease Cash and increase Accounts Payable, $$10$

d$.$ increase both Cash and Owner's Capital, $$10$

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

How will Cat Lady record the October $2$ transaction? $(1$ mark$)$

a$.$ increase both Cash and Accounts Payable, $$2,000$

b$.$ increase both Cash and Bank Loan Payable, $$2,000$

c$.$ increase both Cash and Owner's Capital, $$2,000$

d$.$ increase both Cash and Revenue, $$2,000$

e$.$ increase both Cash and Retained Earnings, $$2,000$

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

How will Cat Lady record the October $3$ transaction? $(1$ mark$)$

a$.$ increase both Cash and Accounts Payable, $$1,200$

b$.$ increase both Cash and Bank Loan Payable, $$1,200$

c$.$ increase both Cash and Owner's Capital, $$1,200$

d$.$ increase both Cash and Revenue, $$1,200$

e$.$ increase both Cash and Retained Earnings, $$1,200$

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

How will Cat Lady record the October $4$ transaction? $(1$ mark$)$

a$.$ increase both Business Licence and Accounts Payable, $$60$

b$.$ increase Business Licence and decrease Cash, $$60$

c$.$ increase Office Expense and decrease Cash, $$60$

d$.$ increase Accounts Payable and decrease Cash, $$60$

e$.$ No entry is necessary because a business licence is intangible.

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

How will Cat Lady classify the cat toys purchased on October $6$ on the balance sheet? $(1$ mark$)$

a$.$ deferred revenue

b$.$ supplies

c$.$ expense

d$.$ equipment

e$.$ prepaid advertising

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

How will Cat Lady record the October $7$ transaction? $(1$ mark$)$

a$.$ increase both Supplies and Accounts Payable, $$400$

b$.$ increase both Supplies Expense and Accounts Payable, $$452$

c$.$ increase both Supplies Expense and Accounts Payable, $$400$

d$.$ increase both Supplies and Accounts Payable, $$452$

e$.$ increase both Equipment and Accounts Payable, $$452$

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