Question

Record adjusting entries as if December 31, 2021.

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 34,000 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 $17,000 of common stock to Suzie. Jul. 1 Sell $17,000 of common stock to Tony. ul. 1 Purchase a one-year Insurance policy for $4,200 ($350 per month) to cover in Juries to participants during outdoor clinics. Jul. 2 Pay legal fees of $1,300 associated with incorporation. Jul. 4 Purchase office supplies of $1,500 on account. pul. 7 Pay for advertising of $200 to a local newspaper for an upcoming mountain biking clinic to be held on July 15. Attendees will be charged $40 on the day of the clinic. Jul. 8 Purchase 10 mountain bikes, paying $17,100 cash. Jul. 15 On the day of the clinic, Great Adventures receives cash of $2,000 from 50 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 $2,300. Jul. 24 Pay $710 to a local radio station for advertising to appear mediately. A kayaking clinic will be held on August 10, and attendees can pay 5140 in advance or $190 on the day of the clinic. Jul. 30 Great Adventures receives cash of 57,000 in advance from 50 kayakers for the upcoming kayak clinic.

Answer 1

	Adjusting entries
No.	Date	Accounts	Debit	Credit	Calculation
28	31-Dec	Depreciation expense	7,200
		Accumulated Depreciation		7,200
29	31-Dec	Insurance expense	2,100		=4,200/12*6
		Prepaid Insurance		2,100
30	31-Dec	Rent expense	1,480		=4,440/12*4
		Prepaid Rent		1,480
31	31-Dec	Supplies (Office) expense	1,280		=1,500-220
		Supplies (Office)		1,280
32	31-Dec	Interest expense	1,025		=41,000*6%*5/12
		Interest Payable		1,025
33	31-Dec	Supplies (Racing) expense	1,890		=2,100-210
		Supplies (Racing)		1,890
34	31-Dec	Income tax expense	13,800
		Income tax payable		13,800

	Great Adventures Inc.
	Journal entries
No.	Date	Accounts	Debit	Credit
1	1-Jul	Cash	17,000
		Common Stock		17,000
2	1-Jul	Cash	17,000
		Common Stock		17,000
3	1-Jul	Prepaid Insurance	4,200
		Cash		4,200
4	2-Jul	Legal fees expense	1,300
		Cash		1,300
5	4-Jul	Supplies (Office)	1,500
		Accounts Payable		1,500
6	7-Jul	Advertising expense	280
		Cash		280
7	8-Jul	Equipment (Bikes)	17,100
		Cash		17,100
8	15-Jul	Cash	2,000
		Service revenue (Clinic)		2,000
9	22-Jul	Cash	2,300
		Service revenue (Clinic)		2,300
10	24-Jul	Advertising expense	710
		Cash		710
11	30-Jul	Cash	7,000
		Deferred Revenue		7,000
12	1-Aug	Cash	41,000
		Notes Payable		41,000
13	4-Aug	Equipment (Kayaks)	22,100
		Cash		22,100
14	10-Aug	Cash	3,800
		Deferred Revenue	7,000
		Service revenue (Clinic)		10,800
15	17-Aug	Cash	12,000
		Service revenue (Clinic)		12,000
16	24-Aug	Accounts Payable	1,500
		Cash		1,500
17	1-Sep	Prepaid Rent	4,440
		Cash		4,440
18	21-Sep	Cash	14,300
		Service revenue (Clinic)		14,300
19	17-Oct	Cash	19,000
		Service revenue (Clinic)		19,000
20	1-Dec	No entry
21	5-Dec	No entry
22	8-Dec	Misc expense	1,400
		Cash		1,400
23	12-Dec	Supplies (Racing)	2,100
		Accounts Payable		2,100
24	15-Dec	Cash	24,000
		Service revenue (Racing)		24,000
25	16-Dec	Salary expense	1,600
		Cash		1,600
26	31-Dec	Dividends	3,800
		Cash		3,800
27	31-Dec	No entry