Grid Iron Prep Inc. (GIPl) is a service business incorporated in January of the
ID: 2430337 • Letter: G
Question
Grid Iron Prep Inc. (GIPl) 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 $190,000 cash on 1/01 b, GIPI purchased a gymnasium building and gym equipment on 1/02 for $60,000, 80% of which related to the gymnasium and 20% to the equipment. C. GlPl paid $600 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 $45,000 cash in training fees on 1/10, of which $42,000 related to January and $3,000 related to February. f GIPI paid $26,000 of wages and $9,000 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 $2,000. Gym equipment will be depreciated using the double-declining-balance method, with an estimated residual value of $3,000 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 $220 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. GlPl's income tax rate is 30%. Assume depreciation for tax is the same amount as depreciation for financial reporting purposesExplanation / Answer
Ans- General Journal
Date General Journal Debit Credit
Jan 1 Cash $ 190,000
Common Stock $190,000
Jan 2 Building 48,000
Equipment 12,000
Cash 60,000
Jan 3 Equipment 600
Cash 600
Jan 4 Accounts Receivable 6,000
Service Revenue 6,000
Jan 10 Cash 45,000
Service Revenue 42,000
Unearned Revenue 3,000
Jan 30 Salaries and Wages Expenses 26,000
Utilities Expensses 9,000
Cash 35,000
Jan 31 Depreciation Expenses 758
Accumulated Depreiciation-Building 383
Accumulated Depreciation-Equipment 375
(building depreciation=$48,000-2,000/10=4,600/12=$383
(equipment depreciation= $12,000-3,000=9,000
1/4=25%*2=50% 9,000*50%= 4,500/12=$375)
Jan 31 Advertising Expenses 220
Accounts Payable 220
Jan 31 Bad Debt Expenses (6,000*3%) 180
Allowance for Doubtful Account 180
Jan 31 Income Tax Expenses
Income Tax Payable
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