Question

I have done the journal entries, but I am not sure that they are correct.

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. a. GIPI issued stock in exchange for $140,000 cash on 1/01. b. GIPI purchased a gymnasium building and gym equipment on 1/02 for $54,000, 80% of which related to the gymnasium and 20% to the equipment. C. GIPI paid $600 cash on 1/03 to have the gym equipment refurbished before it could be used. d. GIPI provided $8,000 in training on 1/04 and expected collection in February e. GIPI collected $40,000 cash in training fees on 1/10, of which $36,000 related to January and $4,000 related to February. f. GIPI paid $26,500 of wages and $7,000 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 $4,000. Gym 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 $240 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.

Answer 1

- X fx no A B C E F G no date general journal debit credit 1 01-Jan $ 140,000 cash common stock (issue of common stock recorded) $ 140,000 2 02-Jan $43,200 $ 10,800 building equipment cash (purchase of building and equipment recorded) $ 54,000 $ 600 03-Jan equipment cash expense on equipment recorded) $ 600 04-Jan $ 8,000 accounts receivable service revenue (service revenue recorded) $ 8,000 5 10-Jan $ 40,000 cash service revenue deferred revenue (service revenue and deferred revenue recorded) $36,000 $ 4,000

B26 1 fc 6 x C A B E F G no date general journal debit credit 30-Jan $ 26,500 $ 7,000 wages expense utilities expense cash (wages expense and utilities expense recorded) $ 33,500 31-Jan $327 $ 304 depreciation expense-building depreciation expense-equipment accumulated depreciation-building accumulated depreciation equipment (depreciation expense recorded) $327 $ 304 31-Jan $ 240 advertising expense accounts payable (advertising expense recorded) $ 240 31-Jan $ 240 bad debts expense allowance for doubtful debts (bad debts expense recorded) $ 240 10 $ 2,817 31-Jan income tax expense income tax payable (income tax expense recorded) $ 2,817

1 x fc current assets H I [ M GRIP IRON PREP INC. income statement for the month ended january 31 revenues service revenue $ 44,000 total revenues $ 44,000 expenses wages expense $ 26,500 utilities expense $7,000 depreciation expense-building $ 327 depreciation expense-equipment $329 advertising expense $ 240 bad debts expense $ 240 total expenses $ 34,636 income before income tax expense $9,364 income tax expense $ 2,809 net income $ 6,555 GRIP IRON PREP INC. balance sheet as of january 31 assets current assets cash $ 91,900 accounts receivable, net $ 7,760 total current assets $ 99,660 long term assets building, net $ 42,873 equipment, net $ 11,071 total long term assets $ 53,944 total assets $ 153,604 liabilities current liabilities deferred revenue $ 4,000 accounts payable $ 240 income tax payable $ 2,809 total current liabilities $ 7,049 stockholder's equity common stock $ 140,000 retained earnings $ 6,555 total stockholder's equity $ 146,555 total liabilities and stockholder's equity | $ 153,604 GRIP IRON PREP INC. statement of retained earnings for the month ended january 31 balance, january 1 add: net income $6,555 balance, january 31 $6,555 $0

for formulas and calculations, refer to the image below -

B2 - X Fax no nol date general journal debit credit 1 140000 43466 cash common stock (issue of common stock recorded) =F10*0.8 =F10*0.2 building equipment cash (purchase of building and equipment recorded) =54000 3 600 43468 equipment cash (expense on equipment recorded) =E13 4 8000 43469 accounts receivable service revenue (service revenue recorded) =F17 5 40000 43475 cash service revenue deferred revenue (service revenue and deferred revenue recorded) 36000 4000

B26 в с E F G no date general journal debit credit 26500 7000 6 [43495 wages expense utilities expense cash (wages expense and utilities expense recorded) =E26+E27 7 =ROUND((E8-4000)/10/12,0) =ROUND((E9-3500)*50%/12,0) 43496 depreciation expense-building depreciation expense-equipment accumulated depreciation-building accumulated depreciation equipment (depreciation expense recorded) 8 43496 advertising expense accounts payable (advertising expense recorded) 9 =E17*3% 43496 bad debts expense allowance for doubtful debts (bad debts expense recorded) =ROUND((F18+F22-E26-E27-E31-E32-E37-E41)*30%,0) 10 43496 income tax expense income tax payable (income tax expense recorded) =E45

K6 current assets GRIP IRON PREP INC. income statement for the month ended january 31 revenues service revenue =F20+F24 total revenues expenses =D28 =E28 =D29 =D33 =D34 =E34 =D39 =E39 =D43 =E43 total expenses =SUM(19:114) income before income tax expense =17-115 income tax expense =ROUND(116*0.3,0) net income =116-117 -E29 GRIP IRON PREP INC. balance sheet as of january 31 assets current assets =D6 =E6-F12-F16+E23-F30 accounts receivable, net =E19-E43 total current assets =SUM(L7:L8) long term assets building, net =E10-F35 equipment, net =E11-F36+E15 total long term assets =SUM(L11:L12) total assets =L9+L13 liabilities current liabilities =D25 =F25 =D40 =F40 =F48 total current liabilities =SUM(L17:L19) stockholder's equity common stock retained earnings =125 total stockholder's equity =SUM(L22:L23) total liabilities and stockholder's equity |=L20+L24 =D48 =F7 GRIP IRON PREP INC. statement of retained earnings for the month ended january 31 balance, january 1 add: net income =118 balance, january 31 =123+124

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