The Setup: Jim and Katie are joint owners of “Body and Swole,” a new gym in town featuring all the hottest gym equipment and workout spaces available. They have been in business for 3 months and while...

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The Setup:

Jim and Katie are joint owners of “Body and Swole,” a new gym in town featuring all the hottest gym equipment and workout spaces available. They have been in business for 3 months and while membership is up, they aren’t sure why there just doesn’t seem to be much cash flowing. Your job is to review their books, catch any errors, and use your bookkeeping knowledge to bring some order and balance to their bottom line.

Here’s the plan:
Download this workbook template, which contains some of the information you’ll need and blank spots to fill in. The tabs include Body and Swole's:

* Chart of Accounts

* General journal

* General ledger

* Trial balance

* Income statement

* Balance sheet

* Inventory tracking

Use the information provided below, along with the information already in the template to complete the journal, general ledger, trial balances, income statement, balance sheet, and inventory tracking.

Here are the transactions that haven’t been recorded in the General Journal yet:

* On May 1st, Jim and Katie used the money from their loan to purchase $25,000 worth of gym equipment.

* On May 1st, rent was paid for the current month and was prepaid for 2 months at $1500/month. Fill in the missing journal entry components for this transaction.

* On May 1st, 40 bags of Protein powder were purchased with cash at $10/bag. The protein powder will be resold to their cutomers.

* May 1st, Iron Maidens, LLC., a subcontracted trainer group, was paid for their first month with check #1001 for $425.

* On May 2nd, they sold 3 bags of protein powder at $20/each, memeber paid with cash. Fill in the missing journal entry components for this transaction.

* The next day, May 3rd, they sold 10 bags of protein powder with cash at $20/each. Complete the journal entry for this transaction.

* Also on May 3rd, they sold 25 Premium memberships at $50/month, members paid cash for first month only.

* On June 1st, they received auto payment from 150 members for their $10 monthly membership fee.

* On June 1st, Body and Swole purchased an additional 10 bags of protein powder with their credit card, at $10 a bag.Which they plan to resell to their members.
* On June 1st, Body and Swole made their first payment on their loan for $375. The loan has a fixed interest amount. $347.23 of that payment went to principal, and $27.77 went towards interest.

* June 12th, wrote check #1003 for advertising costs for the membership drive in the amount of $350.

* On June 15th, Body and Swole paid off the balance on their Visa from the inventory purchase they made.

* July 1st, invoiced Mike Smith for a personal training session for 2 hours, at $50/hr. Fill in what’s missing from this journal entry.

* Also on July 1st, invoiced Sally Sanders for a personal training session for 3 hours, at $50/hr. Add this entry onto the journal.

* July 1st, Body and Swole also made a second payment on their loan.

* July 18th, they sold 5 bags of protein powder at $20/bag, member paid cash. Record this entry onto the journal.

General Ledger

* Fill in the missing transactions. Use the ledger to complete the trial balance, income statement, and balance sheet.

Inventory Tracking

* Look at the inventory tracking tab. Complete the missing calculations to determine what Body and Swole would report as net income under the columns for July and October.

* You have just been informed that the ending inventory for July was incorrect. Instead of $320.00, the ending inventory was actually $350.00. Use this new information to complete the in columns for May - July, and then August - October. Use your calculations to answer questions 4 and 5 on the quiz.

* NOTE: do NOT go back and change Income Statement or Balance Sheet after completing this activity. This activity is just to show how ending inventory can affect Net Income.

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Answered 204 days AfterMay 30, 2022

Answer To: The Setup: Jim and Katie are joint owners of “Body and Swole,” a new gym in town featuring all the...

Nitish Lath answered on Dec 20 2022
47 Votes
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