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 $260,000 cash on 1/01. b. GIPI purchased a gymnasium building and gym equipment on 1/02 for $56,000, 80% of which related to the gymnasium and 20 the equipment. c. GIPI paid $300 cash on 1/03 to have the gym equipment refurbished before it could be used. d. GIPI provided $6,000 in training on 1/04 and expected collection in February. e. GIPI collected $41,000 cash in training fees on 1/10, of which $38,000 related to January and $3,000 related to February. f. GIPI paid $25,000 of wages and $7,200 in utilities on 1/30. g. GIPI will depreciate the gymnasium building using the straight-line method over 10 years with a residual value of $5,500. Gym equipment will be depreciated using the double-declining-balance method, with an estimated residual value of $3,500 at the e its four-year useful life. Record depreciation on 1/31 equal to one-twelfth the yearly amount. h. GIPI received a bill on 1/31 for $340 for advertising done on 1/31. The bill has not been paid or recorded. i. GIPI uses the aging method for estimating doubtful accounts and, on 1/31, will record an estimated 3 percent of its under-30-day 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.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Prepare General Journals, Income Statement, Statement of Retained Earnings, and Balance Sheet. It is not required for you to include General Ledger or Trial Balance, but you may include them if you want. 

 

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 $260,000 cash on 1/01.
b. GIPI purchased a gymnasium building and gym equipment on 1/02 for $56,000, 80% of which related to the gymnasium and 20% to
the equipment.
c. GIPI paid $300 cash on 1/03 to have the gym equipment refurbished before it could be used.
d. GIPI provided $6,000 in training on 1/04 and expected collection in February.
e. GIPI collected $41,000 cash in training fees on 1/10, of which $38,000 related to January and $3,000 related to February.
f. GIPI paid $25,000 of wages and $7,200 in utilities on 1/30.
g. GIPI will depreciate the gymnasium building using the straight-line method over 10 years with a residual value of $5,500. Gym
equipment will be depreciated using the double-declining-balance method, with an estimated residual value of $3,500 at the end of
its four-year useful life. Record depreciation on 1/31 equal to one-twelfth the yearly amount.
h. GIPI received a bill on 1/31 for $340 for advertising done on 1/31. The bill has not been paid or recorded.
i. 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.
j. GIPI's income tax rate is 30%. Assume depreciation for tax is the same amount as depreciation for financial reporting purposes.
Transcribed Image Text: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 $260,000 cash on 1/01. b. GIPI purchased a gymnasium building and gym equipment on 1/02 for $56,000, 80% of which related to the gymnasium and 20% to the equipment. c. GIPI paid $300 cash on 1/03 to have the gym equipment refurbished before it could be used. d. GIPI provided $6,000 in training on 1/04 and expected collection in February. e. GIPI collected $41,000 cash in training fees on 1/10, of which $38,000 related to January and $3,000 related to February. f. GIPI paid $25,000 of wages and $7,200 in utilities on 1/30. g. GIPI will depreciate the gymnasium building using the straight-line method over 10 years with a residual value of $5,500. Gym equipment will be depreciated using the double-declining-balance method, with an estimated residual value of $3,500 at the end of its four-year useful life. Record depreciation on 1/31 equal to one-twelfth the yearly amount. h. GIPI received a bill on 1/31 for $340 for advertising done on 1/31. The bill has not been paid or recorded. i. 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. j. GIPI's income tax rate is 30%. Assume depreciation for tax is the same amount as depreciation for financial reporting purposes.
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