Question

Required information The following information applies to the questions displayed below. 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 40,000 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 $20,000 of common stock to Suzie. Jul. 1 Sell $20,000 of common stock to Tony. Jul. 1 Purchase a one-year insurance policy for $4,080 ($340 per month) to cover injuries to participants during outdoor clinics. Jul. 2 Pay legal fees of $1,400 associated with incorporation. Jul. 4 Purchase office supplies of $1,900 on account. Jul. 7 Pay for advertising of $270 to a local newspaper for an upcoming mountain biking clinic to be held on July 15. Attendees will be charged $30 on the day of the clinic. Jul. 8 Purchase 10 mountain bikes, paying $ 16,000 cash. Jul. 15 On the day of the clinic, Great Adventures receives cash of $1,800 from 60 bikers. Tony conducts the mountain biking clinic. Jul. 22 Because of the success of the first mountain biking clinic, Tony holds another mountain biking clinic and the company receives $2,150. Jul. 24 Pay $780 to a local radio station for advertising to appear immediately. A kayaking clinic will be held on August 10, and attendees can pay $130 in advance or $180 on the day of the clinic. Jul. 30 Great Adventures receives cash of $5,200 in advance from 40 kayakers for the upcoming kayak clinic. Aug. 1 Great Adventures obtains a $36,000 low-interest loan for 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 65 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 $3,600 $180 cach), in addition to the $5,200 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 $12,000 cash. Aug. 24 Office supplies of $1,900 purchased on July 4 are paid in full. Sep. 1 To provide better storage of mountain bikes and kayaks when not in use, the company rents a storage shed for one year, paying $4,080 ($340 per month) in advance. Sep. 21 Tony conducts a rock-climbing clinic. The company receives $14,800 cash. Oct. 17 Tony conducts an orienteering clinic. Participants practice how to understand a topographical map, read an altimeter, use a compass, and orient through heavily wooded areas. The company receives $18,700 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 rock-climbing skills. The first team in each category to complete all checkpoints in order wins. The entry fee for each team is $690. Dec. 5 To help organize and promote the race, Tony hiren his college roommate, Victor. Victor will be paid $40 in salary for each team that competes in the race. His salary will be paid after the race. Dec. 8 The company pays $1,300 to purchase a permit from a state park where the race will be held. The amount is recorded as a miscellaneous expense. Dec. 12 The company purchases racing supplies for $2,500 on account due in 30 days. Supplies include trophies for the top-finishing team in each category, promotional shirts, snack foods and drinks for participants, and field markers to prepare the racecourse. Dec. 15 The company receives $27, 600 cash from a total of forty teams, and the race is held. Dec. 16 The company pays Victor's salary of $1,600. Dec. 31 The company pays a dividend of $3,900 $1,950 to Tony and $1,950 to Suzie). Dec. 31 Using his personal money, Tony purchases a diamond ring for $3,800. Tony surprises Suzie by proposing that they get married. Suzie accepts and they get married! The following information relates to vear-end adiustina entries as of December 31, 2021.

Answer 1

Credit Date Credit Date Credit Date Credit Debit Date Prepaid Insurance 4,080 31-Dec Debit Date Prepaid Rent 4,080 31-Dec Debit Date Supplies (Office) 1,900 31-Dec 1-Jul 2,040 1 -Sep 1,360 4-Jul 1,510 Great Adventures Inc. T Accounts Date Debit Date Cash 1-Jul 20,000 1-Jul 1-Jul 20,000 2-Jul 15-Jul 1,800 7-Jul 22-Jul 2,150 8-Jul 30-Jul 5,200 24-Jul 1-Aug 36,000 10-Aug 3,600 24-Aug 17-Aug 12,000 1-Sep 21-Sep 14,800 8-Dec 17-Oct 18,700 16-Dec 15-Dec 27,600 31-Dec 4-Aug 4,080 1,400 270 16,000 780 13,200 1,900 4,080 1,300 1,600 3,900 Bal. Bal. 2,040 Bal. Bal. 113,340 Supplies (Racing) 2,500 31-Dec Equipment (Bikes) 16,000 2,720 Equipment (Kayaks) 13,200 390 Accum. Depreciation 31-Dec 12-Dec 2,370 8 -Jul 4-Aug 7,100 Bal. Bal. Bal. 7,100 16,000 Deferred Revenue 5,200 30-Jul Accounts Payable 1,900 4-Jul 12-Dec 13,200 Interest Payable 31-Dec Bal. Income taxes payable 31-Dec 24-Aug 10-Aug 5,200 900 13,100 1,900 2,500 2,500 Bal. 900 13,100 Bal. Notes Payable 1-Aug Bal. Dividends 3,900 31-Dec Common Stock 1-Jul 1-Jul Bal. Retained Earnings 33,730 31-Dec 3,900 36,000 31-Dec 85,850 20,000 20,000 31-Dec 31-Dec 3,900 36,000 40,000 Bal. Bal. 48,220 Bal. Service revenue (Racing) 16-Dec Legal fees expense 1,400 27,600 Advertising expense 270 780 7-Jul 24-Jul 2-Jul Bal. Service revenue (Clinic) 15-Jul 22-Jul 10-Aug 17-Aug 21-Sep 31-Dec 58,250 17-Oct 1,800 2,150 8,800 12,000 14,800 18,700 31-Dec 27,600 31-Dec 1,050 31-Dec 1,400 - Bal. Bal. Misc expense 1,300 31-Dec Bal. Salary expense 1,600 31-Dec Bal. Depreciation expense 31-Dec 7,100 31-Dec 8-Dec 16-Dec 31-Dec Insurance expense 2,040 31-Dec 1,300 1,600 7,100 2,040 Bal. Bal. Bal. Bal. Supplies (Office) expense 31-Dec 1,510 31-Dec Rent expense 1,360 31-Dec 31-Dec .. Interest expense 900 31-Dec Supplies (Racing) expense 31-Dec 2,370 31-Dec 31-Dec 1,360 1,510 2,370 900 Bal. Bal. 31-Dec Income tax expense 13,100 31-Dec 13,100 Bal.

Unadjusted TB As of Dec Debit Credit 113,340 4,080 4,080 1,900 2,500 16,000 13,200 Adjusted TB As of Dec Debit Credit 113,340 2,040 2,720 390 130 16,000 13,200 7,100 2,500 Post closing TB As of Dec Debit Credit 113,340 2,040 2,720 390 130 16,000 13,200 7,100 2,500 2,500 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 900 13,100 36,000 40,000 36,000 40,000 900 13,100 36,000 40,000 48,220 3,900 3,900 58,250 27,600 58,250 27,600 1,050 1,400 1,300 1,600 1,050 1,400 1,300 1,600 7,100 2,040 1,360 1,510 2,370 900 13,100 185,450 164,350 164,350 185,450 147,820 147,820

Great Adventures Inc. Journal entries No. Date Accounts 1 1-Jul Cash Common Stock Credit Calculation Debit 20,000 20,000 20,000 1-Jul Cash Common Stock 20,000 3 4,080 1-Jul Prepaid Insurance Cash 4,080 4 1,400 2-Jul Legal fees expense Cash 1,400 1,900 4-Jul Supplies (Office) Accounts Payable 1,900 270 7-Jul Advertising expense Cash 270 7 16,000 8-Jul Equipment (Bikes) Cash 16,000 8 1,800 15-Jul Cash Service revenue (Clinic) 1,800 9 2,150 22-Jul Cash Service revenue (Clinic) 2,150 10 780 24-Jul Advertising expense Cash 780 11 5,200 30-Jul Cash Deferred Revenue 5,200 36,000 121-Aug Cash Notes Payable 36,000 13 13,200 4-Aug Equipment (Kayaks) Cash 13,200 14 10-Aug Cash Deferred Revenue Service revenue (Clinic) 3,600 5,200 8,800 15 12,000 17-Aug Cash Service revenue (Clinic) 12,000 16 1,900 24-Aug Accounts Payable Cash 1,900 17 1-Sep Prepaid Rent 4,080 Cash 4,080 18 14,800 21-Sep Cash Service revenue (Clinic) 14,800 19 18,700 17-Oct Cash Service revenue (Clinic) 18,700 20 1-Dec No entry 21 5-Dec No entry 22 1,300 8-Dec Misc expense Cash 1,300 23 2,500 12-Dec Supplies (Racing) Accounts Payable 2,500 24 27,600 15-Dec Cash Service revenue (Racing) 27,600 25 16-Dec Salary expense 1,600 Cash 1,600 26 3,900 31-Dec Dividends Cash 3,900 27 31-Dec No entry

Credit Calculation Adjusting entries No. Date Accounts 28 31-Dec Depreciation expense Accumulated Depreciation Debit 7,100 7,100 29 2,040 -4,080/12*6 31-Dec Insurance expense Prepaid Insurance 2,040 30 1,360 -4,080/12*4 31-Dec Rent expense Prepaid Rent 1,360 31 31-Dec Supplies (Office) expense Supplies (Office) 1,510 =1,900-390 1,510 32 900 =36,000*6%*5/12 31-Dec Interest expense Interest Payable 900 33 2,370 =2,500-130 31-Dec Supplies (Racing) expense Supplies (Racing) 2,370 34 13,100 31-Dec Income tax expense Income tax payable 13,100 Credit Calculation Closing entries No. Date Accounts 35 31-Dec Service revenue (Clinic) Service revenue (Racing) Retained Earnings Debit 58,250 27,600 85,850 36 33,730 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 1,050 1,400 1,300 1,600 7,100 2,040 1,360 1,510 2,370 900 13,100 37 3,900 31-Dec Retained Earnings Dividends 3,900