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 $290,000 cash on 1/01.
2. GIPI purchased a gymnasium building and gym equipment on 1/02 for $53,000, 80% of which related to the gymnasium and 20% to the equipment.
3. GIPI paid $600 cash on 1/03 to have the gym equipment refurbished before it could be used.
4. GIPI provided $9,000 in training on 1/04 and expected collection in February.
5. GIPI collected $39,000 cash in training fees on 1/10, of which $33,000 related to January and $6,000 related to February.
6. GIPI paid $24,000 of wages and $7,000 in utilities on 1/30.
7. GIPI will depreciate the gymnasium building using the straight-line method over 10 years with a residual value of $3,000. Gym equipment will be depreciated using the double-declining-balance method, with an estimated residual value of $2,500 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 $290 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.

General Journal tab - Prepare journal entries to record the transactions and adjustments listed in (a)–(j). Review the accounts as shown in the General Ledger and Trial Balance tabs.

General Ledger tab - Each journal entry is posted automatically to the general ledger.

Trial Balance tab - You may view the trial balance.

Income Statement tab - Use the drop-down to select the accounts properly included on the income statement.

Statement of Retained Earnings tab - Prepare the statement of retained earnings for the month ended January 31.

Balance Sheet tab - Use the drop-down to select the accounts to properly included on the balance sheet.

Journal Ledger Statement Earnings Choose the appropriate accounts to be reported on the income statement. However, you will need to calculate and enter the amount of the Income before Income Tax Expense and net income or loss for the period. (Round your final answers to the nearest whole dollar amount.) GRID IRON PREP INC. Income Statement For the Month Ended January 31 Revenue $ 0 42,000 Service Revenue Expenses Salaries and Wages Expense Advertising Expense Bad Debt Expense Utilities Expense Depreciation Expense 24,000 290 270 7,000 795 0 $ 32,355 Total Expenses Income before Income Tax Expense Income Tax Expense Net Income 2,894 6,751 X $

Please tell me what i missed and how should i fix it.

Answer 1

Grid Iron Prep Inc. Journal Enteries Trans. Particulars Cash a/c Dr. To Common Stock (Common Stock issued) Debit in $ Credit in $ 290000 290000 b. Dr. Dr. 42400 10600 Building a/c Equipment a/c To Cash (Assets purchased) 53000 600 Equipment a/c Dr. To Cash (Equipment refurbished) 600 d. 9000 Accounts Receivable a/c Dr. To Training Revenue (Revenue on account) 9000 Dr. 39000 Cash a/c To Training Revenue To Unearned Revenue (Cash fro services) 33000 6000 Dr. Dr. 24000 7000 Wages Expense a/c Utilities Expense a/c To Cash (Expense paid) 31000

Adjusting Enteries Trans. Particulars Depreciation a/c Dr. To Accumulated Depreciationn - Build (Being depreciation charged to asset) (43200-4000)/(10 x 12) = 327 Debit in $ Credit in $ 328 328 467 467 Depreciation a/c Dr. To Accumulated Depreciationn - Equip (Being depreciation charged to asset) (10800 + 600 ) x 2 x 1/4 x 1/12 = 428 h. Dr. 290 Advertising Expense a/c To Accounts Payable (Expense accrued) 290 270 270 Bad Debts a/c Dr. To Allowance fro Doubtful accounts (Bad debts estimated) 9000 x 3% Dr. 2894 Income Tax Expense a/c To Income Tax Payable (Income tax accrued) 2894

Worksheet For the period ending January 31 Particulars Cash Accounts Receivable Allowance for Doubtful accounts Building Accumulated Depreciationn - Build Equipment Accumulated Depreciationn - Equip Accounts Payable Unearned Revenue Income Tax Payable Common Stock Training Revenue Wages Expense Utilities Expense Depreciation Advertising Expense Bad Debts Income Tax Expense Totals Unadjusted Adjustments Adjusted Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ 244400 244400 9000 9000 270 270 42400 42400 328 328 11200 11200 467 467 290 290 6000 6000 2894 2894 290000 290000 42000 42000 24000 24000 7000 7000 795 795 290 290 270 270 2894 2894 338000 338000 4249 4 249 342249 342249 42000 Statement of Income For the period ending January 31 Training Revenue Less: Wages Expense Utilities Expense Depreciation Advertising Expense Bad Debts 24000 7000 795 290 270 32355 9645 -2894 6752 Income Tax Expense @ 30% Net Income Statement of Retained Earnings For the period ending January 31 Net Income 6752

Amounts in $ Amounts in $ Balance sheet As at Jan 31 Assets Amounts in $ Amounts in $ Liabilities Current Assets Current Liabilities Cash 244400 Accounts Payable Accounts Receivable 9000 Unearned Revenue Allowance for Doubtfu -270 253130 Income Tax Payable 290 6000 2894 9184 Non Current Assets Building Accumulated Deprecia Equipment Accumulated Deprecia Total Assets 42400 -328 11200 -467 42072 Shareholders Equity Common Stock 290000 10733 Retained Earnings 6752 305935 Total Liabilities & Shareholders Eq. 296752 305935