Question

Grid Iron Prep Inc. (GIPI) is a service business incorporated in January of the current year to provide personal training for athletes aspiring to play college football. The following transactions occurred during the month ended January 31. 1. GIPI issued stock in exchange for $100,000 cash on 1/01. 2. GIPI purchased a gymnasium building and gym equipment on 1/02 for $50,000, 80% of which related to the gymnasium and 20% to the equipment. 3. GIPI paid $260 cash on 1/03 to have the gym equipment refurbished before it could be used. 4. GIPI provided $4,000 in training on 1/04 and expected collection in February. 5. GIPI collected $36,000 cash in training fees on 1/10, of which $34,000 was earned in January and $2,000 would be earned in February 6. GIPI paid $23,000 of wages and $7,000 in utilities on 1/30. 7. GIPI will depreciate the gymnasium building using the straight-line method over 20 years with a residual value of $2,000. Gym equipment will be depreciated using the double-declining-balance method, with an estimated residual value of $2,250 at the end of its four-year useful life. Record depreciation on 1/31 equal to one-twelfth the yearly amount. 8. GIPI received a bill on 1/31 for $350 for advertising done on 1/31. The bill has not been paid or recorded 9. GIPI uses the aging method for estimating doubtful accounts and, on 1/31, will record an estimated 3 percent of its under 30 day-old accounts as not collectible. 10.GIPI's income tax rate is 30%. Assume depreciation for tax is the same amount as depreciation for financial reporting purposes. Requirement General Journal General Ledger Trial Balance Income Statement Statement of Retained Earnings Balance Sheet Prepare journal entries to record the transactions and adjustments listed in (1)-(10). Review the accounts as shown in the General Ledger and Trial Balance tabs. Round your answers to nearest whole dollar. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Journal Debit Date Credit Dec. 1 Cash Ale 100,000 1,00, ano 40,000 10,000 50,000 - Old 260 260 4000 4000 "Der. Janol To Share capital Alc (being shares issued) Janoa Gymnasium Building A/c Dr. Crym Equipment Alc Du. I To Case, Ale (being Building & Equipment purch- Jan 03 Gym Equipment Ale Du. To Cash Ale (being cash paid for sefurbishing equipment & capitalied) Jan 04 Debloss Ale Du. To Gross Receipts Alc e being seewices provided) Jan.lo Cash Alc Gross Receipts Dy. To bobtors Afe Ale To Unearned Income Alc | (being cashe received ) Jan. 30 Wages A/C (eep) Dr. Utilities Ale (exb) TO Cash (being wages & utilities eup paid) Jan. 30 Depreciation Ale Du. TO Gymnasium Building To Gym equipment (being Depreciation seconded) 36000 34000 2000 223800 1000 30,000 492.08 158.33 333,75

Credit Date Jan. 31 Debit 350 350 Jan. 31 Journal Advertising Exp. Afc Dr. To Bills Payable Alc (being will received & amount due to be paid) - Bovision for Doubtful Debts Alca. To Debtoss Afc (being provision created on $4000 @ 3.1.) Provision for Income Tax Du 120 Jan. 31 7037.92 7037.92 c To Income Statement Al (P&L Afc) beip Income Tax provision created) - Total 12, 28, 260 2,28,260