C9-1 Accounting for Operating Activities (Including Depreciation) and Preparing

Question

C9-1 Accounting for Operating Activities (Including Depreciation) and Preparing Financial Statements (Chapters 3, 4, 8, and 9) [LO 3-3, 4-2, 8-2 9-2, 9-3]

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.

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.

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.

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.

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.

GIPI’s income tax rate is 30%. Assume depreciation for tax is the same amount as depreciation for financial reporting purposes.

I JUST NEED THE TRIAL BALANCE , THE INCOME STATEMENT , THE STATEMENT OF RETAINED EARNINGS AND THE BALANCE SHEET FOR THE ABOVE TRANSACTIONS .

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.

No SIM 1 @? 9:26 PM ezto.mheducation.com C9 1 Accouting for Operating Activities pecluing Depreciationt and Preparing Finencial Ssatenents (Chapters 3. 4 &. endRo3-3.42.8-292.93 Grid Iron Prep Inc. (GIPI) is a service business incorporated in January of the cunent year to provide personal training for sthletes aspiring to play college footbal. The following transactions ocoured during the month ended January 31 GIP1 issued stock in oxchange for $100,000 cash on 1/01 GIPl purchssed a gymnasium building and gym equipment on 102 tor $50-000-80% of which related to the gymnasium and 20% to the equipment GIPI paid $260 cash an 1/03 to have the gym equipment refurbi shed before it could be used GIPI provided $4,000 in training on 1/04 and expected collection in February GPI colecied $36,000 cash in training Sees on 1/10, of which 34,000 was carned in January and $2,000 would be eamed n February &G; PI paid $23,000 of wages and 57,000 in utiities on 1/30. GIPI wil depreciate the gymnasium building using the straight-Ine method over 20 years with a residual value of 52,000, Gym equipment wil be depreciated using the double- with an estimated residual value of 52,250 the end of its four-year useful ife. Record depreciation on 1/31 equal to one-tweltin the yearly amount. GPI received a bil on 1/31 for $350 for advertising done on 1/31. The bil has not been paid or recorded GIPI uses the aging method for estimating doubtful accounts and, on 131, wil record an estimated 3 percent of its under 30 day-old accounts as not colloctible. ,a GP's income tax rate is 30%. Assume depreciation for taxis the same amount as depreciaion for inancial reporting 9-03 Apply

Explanation / Answer

TRIAL BALANCE AS ON 31/1 of M/s GIPI

INCOME STATEMENT FOR THE MONTH ENDING 31/1

Retained Earnings at the beginning of the period

Retained Earnings at the end of the period

BALANCE SHEET AS ON 31/1

LIABILITIES

Share capital

Outsanding Advt.Charges

Gym Building

Training Fees recd in advance

Less:Depn

Provision for taxation

Profit for the month

Less:Depn

O/s training fees

Less: Provn for Bad

Debts

TRIAL BALANCE AS ON 31/1 of M/s GIPI

(IN $) PARTICULARS DEBIT CREDIT Share capital 100,000 Cash 55,740 Gymnasium Building 40,000 Gym Equipment 10260 Outstanding Training fees 4000 Training Fees 38000 Training Fees recd in advance 2000 Wages 23000 Utilities 7000 Depreciation 586 Provision for depreciation 586 Advertising charges 350 Outstanding Advertising charges 350 Doubtful debtsProvision- 120 Provision for doubtful debts 120 141056 141,056

INCOME STATEMENT FOR THE MONTH ENDING 31/1

(IN $) Training Fees Income 38000 Less: Wages 23000 Utilities 7000 Advertising charges 350 Bad debts provision 120 Depreciation 586 31056 Net Income 6944 Provision for taxation 2083 Profit after tax 4861 Statement of Retained Earnings

Retained Earnings at the beginning of the period

- Profit for the month 4861

Retained Earnings at the end of the period

4861 M/s GIPI

BALANCE SHEET AS ON 31/1

(IN $)

LIABILITIES

ASSETS

Share capital

100,000 Cash 55740

Outsanding Advt.Charges

350

Gym Building

40000

Training Fees recd in advance

2000

Less:Depn

158 39842

Provision for taxation

2083 Gym eqpt 10260

Profit for the month

4861

Less:Depn

428 9832

O/s training fees

4000

Less: Provn for Bad

Debts

120 3880 109,294 109294

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