Enter today's date:such as 5/1/99
Enter Grade Level completed: such as:12 or college 1,2 etc.
Enter Computer Experience: such as:little,good,moderate,lots.
Why are you taking this test?
PROBLEM 1- A TUTORIAL ASSIGNMENT ON-LINE
THE CREATION OF ON GUARD INC.
TO DO THIS ASSIGNMENT YOU SHOULD READ CHAPTER 1.
This is an ONLINE TUTORIAL ASSIGNMENT. It will be immediately graded and the results presented to you upon depressing the SUBMIT ANSWERS BUTTON.
CLICK THE MOUSE ON THE CORRECT ANSWER.
John Brown had worked for a security company for 10 years installing security systems in autos, houses and businesses. His father died and he inherited $80,000. He decided that he wanted to have his own business.
These are the events that occurred since he made this decision.
HE DID THE FOLLOWING IN HIS FIRST MONTH OF OPERATION:
Examine each of the following transactions and determine if the elements involved are ASSETS, LIABILITIES, INCOME, EXPENSES or OTHER.
1. A friend, who was a lawyer, setup a corporation called ON GUARD INC. He opened a checking account and deposited $70,000.
A checking account is:
2. He paid cash of $44,115. He purchased land at a cost of $69,000 and buildings at a cost of $150,000 and equipment at a cost of $25,000. The bank gave him a mortgage of $199,885.
Buildings and Equipment are:
Land is an:
A mortgage is:
3. He purchased office supplies for $4,950 on account.
How will this transaction affect Assets?
4. He received a loan from a friend of $5,600.
What affect will this have on the owner's equity? increase decrease no affect
5. He ordered insurance for $2,400. He paid $920 cash now. He will pay the rest later.
What affect will this transaction have on the liabilities? Enter the word increase or decrease or no affect.
6. He ordered advertising for $1,200 on account.
Is this advertising an asset, liability, income or expense?
7. He performed professional services for customers and billed them $62,611.
Professional services performed are: (click on the down arrow)
Professional services are: ASSET LIABILITY INCOME EXPENSE OTHER (Click down arrow)
8. He received payments in cash or check of $44,561 from customers on account.
What is On Guard Inc.'s cash balance at this point? If you are using NETSCAPE 3.0, or higher you can use the calculator below:
9. He paid rent(for equipment rentals) of $350.
Is rent an asset, liability, income, or expense ? (Enter below)
10. He paid salaries to employees of $42,500.
Are salaries an asset, liability, income, expense or other?
11. He paid utility bills of $1,300.
Are utility bills an asset, liability, income, expense or other?
12. He paid repair bills of $570.
13. He paid misc. expenses of $80.
14. He paid interest to the bank of $3,999.
15. He received a down payment of $3,000 for a security system to be installed next month.
Refer to all of the above transactions for the month and answer each of the following questions:
What is the total of all the ASSETS of On-Guard Inc. in dollars?
If you are using NETSCAPE 3.0, you can use the calculator below:
He has been very careful to keep track of everything by placing all receipts, cancelled checks and various notes into a big cardboard box.
He has been very busy so he has not had time to look at this valuable data. He knows its important but he is not sure what to do with it. As one of his best friends he gives you this box of data and asks you if you would like to invest $10,000 in his corporation.
Would you invest $10,000 in his corporation? (answer yes or no)