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.




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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