Question

Tony and Suzie graduate from college in May 2021 and begin developing their new business. They begin by offering clinics for basic outdoor activities such as mountain biking or kayaking. Upon developing a customer base, they'll hold their first adventure races. These races will involve four-person teams that race from one checkpoint to the next using a combination of kayaking, mountain biking, orienteering, and trail running. In the long run, they plan to sell outdoor gear and develop a ropes course for outdoor enthusiasts. On July 1, 2021, Tony and Suzie organize their new company as a corporation, Great Adventures Inc. The articles of incorporation state that the corporation will sell 30,000 shares of common stock for $1 each. Each share of stock represents a unit of ownership. Tony and Suzie will act as co-presidents of the company. The following transactions occur from July 1 through December 31. Jul. 1 Sell $15,000 of common stock to Suzie. Jul. 1 Sell $15,000 of common stock to Tony. Jul. 1 Purchase a one-year insurance policy for $5,520 ($460 per month) to cover injuries to participants during outdoor clinics. Jul. 2 Pay legal fees of $1,100 associated with incofporation. Jul. 4 Purchase office supplies of $1,800 on account. Jul. 7 Pay for advertising of $230 to a local newspaper for an upcoming mountain biking elinie to be held on July 15. Attendees will be charged $40 on the day of the clinic. Jul. 8 Purchase 10 mountain bikes, paying $17,900 cash. Jul. 15 On the day of the clinic, Great Adventures receives cash of $2,800 from 70 bikers. Tony conducts the mountain biking clinic. Jul. 22 Because of the success of the first mountain biking clinic, Tony holds another mountain biking alinie and the company receives $3,300. Jul. 24 Pay $730 to a local radio station for advertising to appear immediately. A kayaking alinle will be held on August 10, and attendees can pay $130 in advance or $180 on the day of the alinie. ul. 30 Great Adventures receives cash of $10,400 in advance from 80 kayakers for the upcoming kayak elinie.

Answer 1

24-Aug Accounts Payable 1,800 4-Jul 12-Dec 1,800 2,400 Bal. 2,400

Great Adventures Inc. Journal entries No. Date Accounts 1 1-Jul Cash Common Stock Credit Debit 15,000 15,000 15,000 1-Jul Cash Common Stock 15,000 3 5,520 1-Jul Prepaid Insurance Cash 5,520 4 1,100 2-Jul Legal fees expense Cash 1,100 1,800 4-Jul Supplies (Office) Accounts Payable 1,800 230 7-Jul Advertising expense Cash 230 7 17,900 8-Jul Equipment (Bikes) Cash 17,900 8 2,800 15-Jul Cash Service revenue (Clinic) 2,800 9 3,300 22-Jul Cash Service revenue (Clinic) 3,300 10 730 24-Jul Advertising expense Cash 730 11 10,400 30-Jul Cash Deferred Revenue 10,400 45,000 121-Aug Cash Notes Payable 45,000 13 28,000 4-Aug Equipment (Kayaks) Cash 28,000 14 10-Aug Cash Deferred Revenue Service revenue (Clinic) 3,600 10,400 14,000 15 11,800 17-Aug Cash Service revenue (Clinic) 11,800 16 1,800 24-Aug Accounts Payable Cash 1,800 17 1-Sep Prepaid Rent 4,200 Cash 4,200 18 14,600 21-Sep Cash Service revenue (Clinic) 14,600 19 18,600 17-Oct Cash Service revenue (Clinic) 18,600 20 1-Dec No entry 21 5-Dec No entry 22 1,400 8-Dec Misc expense Cash 1,400 23 2,400 12-Dec Supplies (Racing) Accounts Payable 2,400 24 24,400 15-Dec Cash Service revenue (Racing) 24,400 25 16-Dec Salary expense 2,400 Cash 2,400 26 3,600 31-Dec Dividends Cash 3,600 27 31-Dec No entry

Credit Calculation Adjusting entries No. Date Accounts 28 31-Dec Depreciation expense Accumulated Depreciation Debit 7,400 7,400 29 2,760 =5,520/12*6 31-Dec Insurance expense Prepaid Insurance 2,760 30 1,400 -4,200/12*4 31-Dec Rent expense Prepaid Rent 1,400 31 1,560 =1,800-240 31-Dec Supplies (Office) expense Supplies (Office) 1,560 32 1,125 -45,000*6%*5/12 31-Dec Interest expense Interest Payable 1,125 33 2,250 =2,400-150 31-Dec Supplies (Racing) expense Supplies (Racing) 2,250 34 14,100 31-Dec Income tax expense Income tax payable 14,100 Credit Calculation Closing entries No. Date Accounts 35 31-Dec Service revenue (Clinic) Service revenue (Racing) Retained Earnings Debit 65,100 24,400 89,500 36 36,455 31-Dec Retained Earnings Advertising expense Legal fees expense Misc expense Salary expense Depreciation expense Insurance expense Rent expense Supplies (Office) expense Supplies (Racing) expense Interest expense Income tax expense 960 1,100 1,400 2,400 7,400 2,760 1,400 1,560 2,250 1,125 14,100 37 3,600 31-Dec Retained Earnings Dividends 3,600

Credit Date Credit Date Credit Date Credit Debit Date Prepaid Insurance 5,520 31-Dec Debit Date Prepaid Rent 4,200 31-Dec Debit Date Supplies (Office) 1,800 31-Dec 1.Jul 2,760 1-Sep 1,400 4 -Jul 1,560 Great Adventures Inc. T Accounts Date Debit Date Cash 1-Jul 15,000 1-Jul 1-Jul 15,000 2-Jul 15-Jul 2,800 7-Jul 22-Jul 3,300 8-Jul 30-Jul 10,400 24-Jul 1-Aug 45,000 10-Aug 3,600 24-Aug 17-Aug 11,800 1-Sep 21-Sep 14,600 8-Dec 17-Oct 18,600 16-Dec 15-Dec 24,400 31-Dec 4-Aug 5,520 1,100 230 17,900 730 28,000 1,800 4,200 1,400 2,400 3,600 Bal. Bal. 2,760 Bal. 2,800 Bal. 240 97,620 Supplies (Racing) 2,400 31-Dec Equipment (Bikes) 17,900 Equipment (Kayaks) 28,000 Accum. Depreciation 31-Dec 12-Dec 2,250 8 -Jul 4-Aug 7,400 Bal. Bal. Bal. 7,400 17,900 Deferred Revenue 10,400 30-Jul Accounts Payable 1,800 4-Jul 12-Dec 28,000 Interest Payable 31-Dec Bal. Income taxes payable 31-Dec 24-Aug 10-Aug 10,400 1,125 14,100 1,800 2,400 2,400 Bal. 1,125 14,100 Bal. Notes Payable 1-Aug Bal. Dividends 3,600 31-Dec Common Stock 1-Jul 1-Jul 45,000 31-Dec Bal. Retained Earnings 36,455 31-Dec 3,600 15,000 15,000 89,500 31-Dec 31-Dec 3,600 45,000 30,000 Bal. Bal. 49,445 Bal. Service revenue (Racing) 16-Dec 24,400 Advertising expense 230 730 Legal fees expense 1,100 7-Jul 24-Jul 2-Jul Bal. Service revenue (Clinic) 15-Jul 22-Jul 10-Aug 17-Aug 21-Sep 31-Dec 65,100 17-Oct 2,800 3,300 14,000 11,800 14,600 18,600 31-Dec 24,400 31-Dec 960 31-Dec 1,100 - Bal. Bal. Bal. Misc expense 1,400 31-Dec Bal. Salary expense 2,400 31-Dec 8-Dec 16-Dec 31-Dec Depreciation expense 7,400 31-Dec 31-Dec Insurance expense 2,760 31-Dec 1,400 2,400 7,400 2,760 Bal. Bal. Bal. Bal. Supplies (Office) expense 31-Dec 31-Dec Rent expense 1,400 31-Dec 31-Dec Supplies (Racing) expense 31-Dec 2,250 31-Dec 31-Dec Interest expense 1,125 31-Dec 1,400 1,560 2,250 1,125 Bal. Bal. 31-Dec Income tax expense 14,100 31-Dec 14,100 Bal.

Unadjusted TB As of Dec Debit Credit 97,620 5,520 4,200 1,800 2,400 17,900 28,000 Adjusted TB As of Dec Debit Credit 97,620 2,760 2,800 240 150 17,900 28,000 7,400 2,400 Post closing TB As of Dec Debit Credit 97,620 2,760 2,800 240 150 17,900 28,000 7,400 2,400 2,400 Great Adventures Inc. Trial Balance Accounts Cash Prepaid Insurance Prepaid Rent Supplies (Office) Supplies (Racing) Equipment (Bikes) Equipment (Kayaks) Accumulated Depreciation Accounts Payable Deferred Revenue Interest Payable Income taxes payable Notes Payable Common stock Retained Earnings Dividends Service revenue (Clinic) Service revenue (Racing) Advertising expense Legal fees expense Misc expense Salary expense Depreciation expense Insurance expense Rent expense Supplies (Office) expense Supplies (Racing) expense Interest expense Income tax expense Totals 1,125 14,100 45,000 30,000 45,000 30,000 1,125 14,100 45,000 30,000 49,445 3,600 3,600 65,100 24,400 65,100 24,400 960 1,100 1,400 2,400 960 1,100 1,400 2,400 7,400 2,760 1,400 1,560 2,250 1,125 14,100 189,525 166,900 166,900 189,525 149,470 149,470