Question: Accounting for Operating Activities (Including Depreciation) and Preparing Financial Statements (Comprehensive Exercise) Grid Iron Prep Inc. (GIPI) is a sole proprietorship created in January 2009 to provide personal training for athletes aspiring to play college football. The following transactions occurred during the year ended December 31, 2009.
(a) Gerry Ingalls contributed $90,000 cash to start his sole proprietorship.
(b) GIPI purchased a gymnasium building and gym equipment at the beginning of the year for $50,000, 80 percent of which related to the gymnasium and 20 percent to the equipment.
(c) GIPI paid $250 cash to have the gym equipment refurbished before it could be used.
(d) GIPI collected $36,000 cash in training fees during the year, of which $2,000 was for customer deposits to be earned in 2010.
(e) GIPI paid $23,000 of wages and $7,000 in utilities.
(f) GIPI provided $3,000 in training during the final month of the year and expected collection in 2010. (g) GIPI will depreciate the gymnasium building using the double-declining-balance method over 20 years. Gym equipment will be depreciated using the straight-line method, with an estimated residual value of $2,250 at the end of its four-year useful life.
(h) GIPI received a bill for $350 of advertising done during December. The bill has not been paid or recorded.
(i) GIPI will record an estimated 5 percent of its accounts receivable as not collectible.
Required: 1. Prepare journal entries to record the transactions and adjustments listed in a through i.
2. Prepare GIPI's 2009 income statement, statement of owners' equity, and classified balance sheet.