Question

m. Made a payment to reduce the prinipal of the note payable n. Made a cash withdrawal. Reguired Analyze each transaction and show the accounts affected by entering the corre- sponding numbers in the appropriate debit or credit column as shown in transac- 128 tion a. Indicate no entry, if appropriate Transaction Analysis, T Accounts, and Trial Balance LO3 L04 LOS P10. Bob Lutz opened a secretarial school called Best Secretarial Training a. Lutz contributed the following assets to the business: Cash $5,700 4,300 3,600 Office Equipment 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, s190. d. Recelved 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 S1,300. e. Purchased supplies on credit, $330. f. Billed the enrolled students, $1,740. lyzing Business Transactions 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 srudents previously billed, $1,080. k. Paid the utility bill for the current month, $90. I. Paid an assistant one week's salary, $440, m. Made a cash withdrawal of $300. Reguired 1. Set up the following T accounts: Cash;, Accounts Receivable; Supplies; Com- puters; Office Equipment; Accounts Payable; B. Latz, Capital; B. L.utz, Withdrawals; Tuition Revenue; Salaries Expense; Uilities Expense, Ren Expense; Repair Expense; and Advertising Expense 2. Record the transactions directly in the T accounts, using the transaction let ter to identify each debit and credit. 3. Prepare a trial balance using today's date was received from the revenues? What business issues might you see arising from the differences in these numbers? nsight4.Examine transactions f and j. What were the revenues and how much cash

Answer 1

Answer 1 & 2:

Transaction d is not an accounting transaction since it describes enrollment of students and possible future billings.

Answer c:

Answer d:

The transactions f and j refers to Credit sales and collections. The sales is $1740 and as of today Account Receivable is $660. Build-up of receivables will need working capital and it also exposes the firm to potential bad debts. Mr Lutz should inquire and gather if the training industry, sales are done on credit terms. If the industry practice is cash services or advance payments, Mr Lutz definitely will have potential issues. If the industry allows tuition services on credit, then he should get credit terms allowed, industry averages in Receivable turnover and DSO (Days sales outstanding) and monitor and control his receivables