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 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 39,000 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 $19,500 of common stock to Suzie. Jul. 1 Sell $19,500 of common stock to Tony. Jul. 1 Purchase a one-year insurance policy for $4,200 $350 per month) to cover injuries to participants during outdoor clinics. Jul. 2 Pay legal fees of $1,200 associated with incorporation. Jul. 4 Purchase office supplies of $1,900 on account. Jul. 7 Pay for advertising of $300 to a local newspaper for an upcoming mountain biking clinic to be held on July 15. Attendees will be charged $60 on the day of the clinic. Jul. Purchase 10 mountain bikes, paying $17,200 cash. Jul. 15 On the day of the clinic, Great Adventures receives cash of $3,000 from 50 bikers. Tony conducts the mountain biking clinic. Jul. 22 Because of the success of the first mountain biking elinie, Tony holds another mountain biking elinie and the company receives $3,300. Jul. 24 Pay $850 to a local radio station for advertising to appear immediately. A kayaking clinie will be held on August 10, and attendees can pay $110 in advance or $160 on the day of the clinic. Jul. 30 Great Adventures receives cash of $7,700 in advance from 70 kayakers for the upcoming kayak clinic. Aug. 1 Great Adventures obtains a $33,000 low-interest loan for the company from the city council, which has recently passed an initiative encouraging business development related to outdoor activities.

Answer 1

Great Adventures Journal Enteries Date Particulars 1.7.2021 Cash a/c Dr. To Common Stock (Being Equal no. of stock issued to Tony and Suzie) Debit in $Credit in $ 39000 39000 Debit in $ Credit in $ 29250 4200 1900 4200 17200 1.7.2021 Prepaid Insurance a/c Dr. To Cash (Being Insurance paid in cash) 360 per month Trial Balance For the period ending 31.7.2021 Particulars Cash Prepaid Insurance Office Supplies Equipment(Bikes) Accounts Payable Common Stock Service revenue (Racing) Unearned Kayaking Service Legal Fees Advertising Expense Totals 4200 1900 39000 6300 7700 1200 2.7.2021 Legal Fees a/c Dr. To Cash (Being Legal Fees paid in Cash) 1200 1200 1150 54900 54900 1900 4.7.2021 Office Supplies a/c Dr. To Accounts Payable (Being Supplies purchased on account) 1900 300 7.7.2021 Advertising Expense a/c Dr. To Cash (Being advertising expense paid to newspaper) 300 17200 8.7.2021 Mountain Bikes a/c Dr. To Cash (Being 10 Mountain Bikes purchased for cash) 17200 3000 15.7.2021 Cash a/c Dr. To Service revenue (Racing) (Being cash collected from Mountain Bike attendees) 3000 3300 22.7.2021 Cash a/c Dr. To Service revenue (Racing) (Being cash collected from Mountain Bike attendees) 3300 850 24.7.2021 Advertising Expense a/c Dr. To Cash (Being advertising expense paid to local radio station) 7700 30.7.2021 Cash a/c Dr. To Unearned Kayaking Service (Being Advance received for Kayaking service) 7700

Great Adventures Journal Enteries Date Particulars 1.8.2021 Cash a/c Dr. To Loan (Being Loan taken from city council) Debit in $Credit in $ 33000 33000 4.8.2021 23400 Kayaks a/c Dr. To Cash (Kayaks purchased in cash) 23400 1 1 3200 7700 10.8.2021 Cash a/c Dr. Deferred revenue a/c Dr. To Service revenue (Clinic) (Being revenue recognized) 10900 11600 17.8.2021 Cash a/c Dr. To Service revenue (Clinic) 11600 1900 24.8.2021 Accounts Payable a/c Dr. To Cash (Being Accounts Payable paid in cash) 1900 1.9.2021 3960 Prepaid rent a/c Dr. To Cash (Being rent paid in cash) 330 per month 3960 Dr. 13400 21.9.2021 Cash a/c To Service revenue (Clinic) (Being services performed for cash) 13400 19300 17.10.2021 Cash a/c Dr. To Service revenue (Clinic) (Being services performed for cash) 19300 2000 8.12.2021 Miscellaneous expense a/c Dr. To Cash (Being permit purchased in cash) 2000 26001 12.12.2021 Racing Supplies a/c Dr. To Accounts Payable (Being Racing supplies purchased on account) 2600 26000 15.12.2021 Cash a/c Dr. To Service revenue (Racing) (Being services performed for cash) 26000 2000) 16.12.2021 Salary expense a/c Dr. To Cash (Being salary paid to Victor in cash) 2000 4000 31.12.2021 Dividend a/c Dr. To Cash (Being dividend paid to Tony and Suzie) 4000 31.12.2021 No Entry