Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Grid Iron Prep Incorporated (GIP) is a service business incorporated in January of the current year to provide personal training for athletes aspiring to

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed

Grid Iron Prep Incorporated (GIP) 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 $120,000 cash on 1/01. b. GIPI purchased a gymnasium building and gym equipment on 1/02 for $52,000, 80% of which related to the gymnasium and 20% to the equipment. c. GIPI paid $400 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 $38,000 cash in training fees on 1/10, of which $35,000 related to January and $3,000 related to February. GIPI paid $24,500 of wages and $6,000 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 $3,000. Gym equipment will be depreciated using the double-declining-balance method, with an estimated residual value of $2,500 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 $260 for advertising done on 1/31. The bill has not been paid or recorded. LGIPI 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.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial and Managerial Accounting

Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac

12th edition

978-1133952428, 1285078578, 1133952429, 978-1285078571

More Books

Students also viewed these Accounting questions