Tina Tutor runs a business called “Tutor Solutions” and her business provides tutoring services to student in Accounting, Economics, and Mathematics.
The following transactions took place at Tutor Solutions during the month of August 2019.
Record each of the following transactions (where required), using the blank General Journal provided on the following pages.
August 2 Tina paid rent for the building where she does tutoring for the month of August. The total amount that she paid was $3,200.
August 7 Tina purchased a computer so that she can send e-mails to her students reminding them of their tutoring sessions with her. The total cost of the computer was $5,500. Tina paid $2,600 cash and will pay the outstanding balance in 60 days.
August 12 Tina provided some tutoring to a group of students from the local high school. She charged the high school $1,800 for these sessions provided. The high school paid $1,000 immediately and will pay the rest of the money at the end of August 2019.
August 16 Tina borrowed $6,000 from Loans-4-U to expand her business (grow her business) and will repay this loan over the next year. Loans-4-U paid this money into the bank account of ‘Tutor Solutions’.
August 20 One of Tina’s students broke a chair by accident. A handyman repaired the broken chair and charged Tina $100 for his services. Tina will pay the handyman at the end of September 2019.
August 25 Tina paid salaries of $5,000 to staff members who provide tutoring services at ‘Tutor Solutions’.
August 28 Tina went to the doctor but left her wallet at home, so she paid for the appointment with cash from her business. The total amount that she paid was $60.
August 29 Tina received the outstanding balance from the high school for the tutoring services that she rendered on 12 August.
August 30 Tina recorded Revenue for the month of August for tutoring services provided, of which $6,000 was paid in cash and $8,000 was on credit.
August 31 Tina repaid $500 of the money that she owes to Loans-4-U.
The following journals have been prepared by Tina for ‘Tutor Solutions’ for transactions that took place in September 2019. Tina has not posted these journals to the different General Ledger Accounts yet and have asked you to do this for her.
Post the updated General Ledger balances calculated in Part B (Tutor Solutions) to the Trial Balance below. Total both the debit and credit columns on completion.
QUESTION 2: Accounting Assumptions
Part 1 The Business Letter
You work for the accounting firm that provides accounting services to “Tutor Solutions”. Tina Tutor would like you to explain some transactions to her as she wants to understand the accounting process a bit better.
You need to write a letter to Tina to explain the following three queries about her accounting information that are listed below (refer to Query 1; Query 2; and Query 3 below). Your letter to her must be a formal business letter, properly addressed, and professionally written in business style language. The letter should be no more than 300 – 400 words (maximum). Penalties may be applied if the word limit is exceeded.
On the following page, you are required write a letter in your own words to Tina Tutor explaining certain information to support the THREE queries.