90.2K

Verified Solution

Link Copied!

Grid Iron Prep Incorporated $($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 $31.$

a$.$ GIPI issued stock in exchange for $$100,000$ cash on $\frac{1}{01}.$

b$.$ GIPI purchased a gymnasium building and gym equipment on $\frac{1}{02}$ for $$50,000,80\%$ of which related to the gymnasium and $20\%$ to

the equipment.

c$.$ GIPI paid $$260$ cash on $\frac{1}{03}$ to have the gym equipment refurbished before it could be used.

d$.$ GIPI provided $$4,000$ in training on $\frac{1}{04}$ and expected collection in February.

e$.$ GIPI collected $$36,000$ cash in training fees on $\frac{1}{10},$ of which $$34,000$ related to January and $$2,000$ related to February.

f$.$ GIPI paid $$23,000$ of wages and $$7,000$ in utilities on $\frac{1}{30}.$

g$.$ GIPI will depreciate the gymasium 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 $\frac{1}{31}$ equal to one$-$twelfth the yearly amount.

h$.$ GIPI received a bill on $\frac{1}{31}$ for $$350$ for advertising done on $\frac{1}{31}.$ The bill has not been paid or recorded.

i$.$ GIPI uses the aging method for estimating doubtful accounts and, on $\frac{1}{31},$ will record an estimated $3$ percent of its under$-30-$day$-$old

accounts as not collectible.

j$.$ 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$)$ to $($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 adjusted trial balance.

Income Statement tab $-$ Prepare the income statement for the month ended January $31.$

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

Balance Sheet tab $-$ Prepare the balance sheet as of January $31.$

Answer & Explanation Solved by verified expert

See Answer