accounting

Bob Lutz opened a secretarial school called Best Secretarial Training.

 

a.  Lutz contributed the following assets to the business:

 

Cash $5,700

 

Computers 4,300

 

Office Equipment 3,600

 

b.   Found a location for his business and paid the first month’s rent, $260.

 

c.   Paid for an advertisement announcing the opening of the school, $190.

 

d.   Received applications from three students for a four-week secretarial

 

program and two students for a ten-day keyboarding course. The students will be

 

billed a total of $1,300.

 

e.   Purchased supplies on credit, $330.

 

f.   Billed the enrolled students, $1,740.

 

g.   Purchased a second-hand computer, $480, and office equipment, $380, on credit.

 

h.   Paid for the supplies purchased on credit in e, $330.

 

i.    Paid cash to repair a broken computer, $40.

 

j.   Received partial payment from students previously billed, $1,080.

 

k.  Paid the utility bill for the current month, $90.

 

l.   Paid an assistant one week’s salary, $440.

 

m.  Made a cash withdrawal of $300.

 

Required

 

1.  Set up the following T accounts: Cash; Accounts Receivable; Supplies; Computers; Office

 

Equipment; Accounts Payable; B. Lutz, Capital; B. Lutz, Withdrawals; Tuition Revenue; Salaries Expense; Utilities Expense; Rent Expense; Repair Expense; and Advertising Expense.

 

2.  Record the transactions directly in the T accounts, using the transaction letter to identify each debit and credit.

 

3.  Prepare a trial balance using today’s date.

 

4.  Examine transactions f and j.  What were the revenues and how much cash was received from the revenues?  What business issues might you see arising from the differences in these numbers?

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