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Case study on Secretarial Training.

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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