Question

The following information appies to the questions displayed below. On July 1, 2018, Tony and Suzie organize their new company as a corporation, Great Adventures Inc. The following transactions occur from August 1 through Decomber 31 Also, the balances are provided for the month ended July 31. ug. 1 Great dventures obtains a 35,000 ow interest loan or the company from the city council which has recently passed an initiative encouraging business development related to outdoor activities. The loan is due in three years, and 6% annual interest is due each year on July 31 Aug. 4 The company purchases 14 kayaks, paying $13,200 cash. Aug. 10 Twenty additional kayakers pay $4,000 ($200 each), in addition to the $9,000 that was paid in advance on July 30, on the day of the clinic. Tony conducts the first kayak clinic. Aug. 17 Tony conducts a second kayak clinic, and the company receives $12,400 cash. Aug. 24 Office supplies of $1,400 purchased on July 4 are pald in full Sep. 1 To provide better storage of mountain bikes and kayaks when not in use, the company rents a storage shed, purchasing a one-year rental policy for $3,120 ($260 per month). Sep. 21 Tony conducts a rock-climbing clinic. The company receives $14100 cash. Oct 17 Tony conducts an orienteering clinic. Participants practice how to understand a topographical map, read an altimeter, use a compass, and orlent through heavily wooded areas. The company recelves $19,300 cash. Dec. 1 Tony decides to hold the company's first adventure race on December 15. Four-person teams will race from checkpoint to checkpoint using a combination of mountain biking, kayaking, orienteering, trail running, and r The first team in each category to complete all checkpoints in order wins. The entry fee for each team is $670. Dec. 5 To help organize and promote the race, Tony hires his college roommate, Victor. Victor will be paid $50 in salary for each team that competes in the race. His salary will be paid after the race. Dec. 8 The company pays $1100 to purchase a permit from a state park where the race will be held. The amount is recorded as a miscel laneous expense. Dec. 12 The company purchases racing supplies for $2,800 on account due in 30 days. Supplies include trophies for the top-finishing teams in each category, promotional shirts, snack foods and drinks for participants, and field markers to prepare the racecourse. Dec. 15 The company receives $26,800 cash from a total of forty teams, and the race is held. Doc. 16 The company pays Victor's salary of $2,000. Dec. 31 The company pays a dividend of $4,300 ($2150 to Tony and $2.150 to Suzie). Dec. 31 Using his personal money, Tony purchases a diamond ring for $3,900. Tony surprises Suzie by proposing that they get married. Suzie accepts and they get married! skills. The following information relates to year-end adjusting entries as of December 31, 2018. a. Depreciation of the mountain bikes purchased on July 8 and kayaks purchased on August 4 totals $7,500 b. Six months worth of insurance has expired. c. Four months' worth of rent has expired. d. Of the $1,400 of office supplies purchased on July 4, $230 remains. e. Interest expense on the $35,000 loan obtained from the city council on August 1 should be recorded. f. Of the $2,800 of racing supplies purchased on December 12, $280 remains. g. Suzie calculates that the company owes $14,900 in income taxes. Assume the following ending balances for the month of July Cash Prepaid insurance Supplies (Office) Equipment (Bilces) Accounts payable Deferred revenue Common stock Service revenue (Clinic) Advertising expense Legal fees expense Balance $32,270 3720 1400 16,100 1400 9,000 39.000 6,500 1,100

Answer 1