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 36,000 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 $18,000 of common stock to Suzie. Jul. 1 Sell $18,000 of common stock to Tony. Jul. 1 Purchase a one-year insurance policy for $5,880 ($490 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 $1,100 on account. Jul. 7 Pay for advertising of $380 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. B Purchase 10 mountain bikes, paying $18,200 cash. Jul. 15 On the day of the clinic, Great Adventures receives cash of $4,800 from 80 bikers. Tony conducts the mountain biking clinic. Jul. 22 Because of the success of the first mountain biking clinie, Tony holds another mountain biking elinie and the company receives $5,300. Jul. 24 Pay $810 to a local radio station for advertising to appear immediately. A kayaking clinic will be held on August 10, and attendees can pay $140 in advance or $190 on the day of the clinic. Jul. 30 Great Adventures receives cash of $8,400 in advance from 60 kayakers for the upcoming kayak clinic. Aug. 1 Great Adventures obtains a $45,000 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 68 annual interest is due each year on July 31. 4 The company purchases 14 kayaks, paying $20,900 cash. Aug. 10 Twenty additional kayakers pay $3,800 ($190 each), in addition to the $8,400 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 elinie, and the company receives $11,200 cash. Aug. 24 office supplies of $1,100 purchased on July 4 are paid in full. Бер. 1 To provide better storage of mountain bikes and kayaku when not in use, the company rents a storage shed for one year, paying $2,880 ($240 per month) in advance. Sep. 21 Tony conducts a rock-climbing clinic. The company receives $13,900 cash. Jul. Aug.

Answer 1

Note - We are allowed to process 4 question from the multiple questions asked.

1. Journal Entries -

Credit Date Jul 1 Great Adventures Inc. Journal Entries Account Titles Debit Cash $ 18,000 Common Stock (Being Shares issued to Suzie) $ 18,000 Jul 1 Cash $ 18,000 Common Stock (Being Shares issued to Tony) $ 18,000 Jul 1 Prepaid Insurance $ 5,880 Cash $ 5,880 (Being Insurance paid for 1 year in advance) Jul 2 Legal Fees $ 1,200 Cash (Being Legal Fees paid in cash) $ 1,200 Jul 4 Office Supplies $ 1,100 Accounts Payable $ 1,100 (Being Office supplies purchased on account) Jul 7 380 Advertising Expense $ Cash (Being advertising Fees Paid) $ 380 Jul 8 Montain Bikes $ 18,200 Cash (Being 10 mountain bikes purchased) $ 18,200 Jul 15 Cash $ 4,800 Clinic Revenue $ 4,800 (Being Cash received on mountain bike clinic) Jul 22 Cash $ 5,300 Clinic Revenue $ 5,300 (Being Cash received on mountain bike clinic) Jul 24 810 Advertising Expense $ Cash (Being advertising Fees Paid) $ 810 Jul 30 Cash $ 8,400 Unearned Revenue (Being advance revenue received) $ 8,400 Aug 1 Cash $ 45,000 Notes Payable (Long Term) (Being Loan taken for 3 years) $ 45,000 $ 20,900 Aug 4 Kayaks Cash $ 20,900 (Being Kayaks Purchased) Aug 10 Cash $ 3,800 Unearned Revenue $ 8,400 Clinic Revenue (Being Kayaks clinic provided) $ 12,200 Aug 17 Cash $ 11,200 Clinic Revenue (Being Kayaks clinic provided) $ 11,200 Aug 24 Accounts Payable $ 1,100 Cash (Being Accounts Paid on account) $ 1,100 Sept 1 Prepaid Rent $ 2,880 Cash (Being Rent paid in advance for an year) $ 2,880 Sept 21 Cash $ 13,900 Clinic Revenue (Being Clinic service provided) $ 13,900 Oct 17 Cash $ 18,700 Clinic Revenue (Being Clinic service provided) $ 18,700 Dec 1 No Entry Dec 5 No Entry Dec 8 Miscelleneous Expense $ 1,600 Cash (Being Permit purchased to conduct race) $ 1,600 Dec 12 Racing Supplies $ 2,700 Accounts Payable (Being Supplies purchased on account) $ 2,700 Dec 15 Cash $ 25,600 Racing Revenue (Being tournament race revenue) $ 25,600 Dec 16 Salary Expense $ 1,600 Cash (Being victors Salary Paid) $ 1,600 Dec 31 $ 5,000 Dividend Cash $ 5,000 (Being dividend Paid) Dec 31 No Entry

2. Unadjusted Trial Balance -

Credit Great Adventures Inc. Unadjusted Trial Balance Account Titles Debit Cash $ 113,150 Prepaid Rent $ 2,880 Prepaid Insurance $ 5,880 Office Supplies $ 1,100 Racing Supplies $ 2,700 Montain Bikes $ 18,200 Kayaks $ 20,900 Accounts Payable Notes Payable (Long Term) Common Stock Dividend $ 5,000 Clinic Revenue Racting Revenue Legal Fees $ 1,200 Advertising Expense $ 1,190 Miscelleneous Expense $ 1,600 Salary Expense $ 1,600 $ 2,700 $ 45,000 $ 36,000 $ 66,100 $ 25,600 Total $175,400 $175,400

3. Adjusted Entries -

Great Adventures Inc. Adjusting Entries Date Account Titles Debit Credit Depreciation Expenses $ 7,820 Accumulated Depreciation $ 7,820 (Being depreciation provided on bikes and Kayaks) a b Insurance Expenses $ 2,940 Prepaid Insurance (Being Insurance for 6 months expired) $ 2,940 C Rent Expenses $ 960 Prepaid Rent $ (Being rent expenses for 4 months incurred) 960 d Office Supplies Expenses $ 900 Office Supplies (Being Office Supplies utilised) $ 900 e Interest Expenses $ 1,125 Interest Payable $ 1,125 (Being Interest Charged on the noted payable) ($45,000*6%*5/12) f Racing Supplies Expenses $ 2,550 Racing Supplies (Being supplies utilised) $ 2,550 Income Tax Expenses $ 13,800 Income Tax Payable (Being income tax incurred) $ 13,800

4. Adjusted Trial Balance -

Credit Great Adventures Inc. Adjusted Trial Balance Account Titles Debit Cash $113,150 Prepaid Rent $ 1,920 Prepaid Insurance $ 2,940 Office Supplies $ 200 Racing Supplies $ 150 Montain Bikes $ 18,200 Kayaks $ 20,900 Accumulated Depreciation Accounts Payable Interest Payable Income Tax Payable Notes Payable (Long Term) Common Stock Dividend $ 5,000 Clinic Revenue Racing Revenue Legal Fees $ 1,200 Advertising Expense $ 1,190 Miscelleneous Expense $ 1,600 Salary Expense $ 1,600 Depreciation Expenses $ 7,820 Insurance Expenses $ 2,940 Rent Expenses $ 960 Office Supplies Expenses $ 900 Interest Expenses $ 1,125 Racing Supplies Expenses $ 2,550 Income Tax Expenses $ 13,800 $ 7,820 $ 2,700 $ 1,125 $ 13,800 $ 45,000 $ 36,000 $ 66,100 $ 25,600 Total $ 198,145 $ 198,145

5. Income Statement -

$ 66,100 $ 25,600 $ 91,700 Great Adventures Inc. Income Statement For the period ended December 31, 2021 Clinic Revenue Racing Revenue Total Revenue Operating Expenses: Legal Fees $ 1,200 Advertising Expense $ 1,190 Miscelleneous Expense $ 1,600 Salary Expense $ 1,600 Depreciation Expenses $ 7,820 Insurance Expenses $ 2,940 Rent Expenses $ 960 Office Supplies Expenses $ 900 Racing Supplies Expenses $ 2,550 Total Operating Expenses $ 20,760 $ 70,940 Operating Profit Non Operating Expenses: Interest Expenses Income Before Tax $ 1,125 $ 69,815 (-) Income Tax Expenses $ 13,800 Net Income $ 56,015

6. Statement of Retained Earnings -

Great Adventures Inc. Statement of Stockholder's Equity As at December 31, 2021 Common Stock Retained Earnings Dividend $ (5,000) Net Income $ 56,015 $ 36,000 $ 51,015 $ 87,015 Total Stockholder's Equity

7. Balance Sheet -

Great Adventures Inc. Balance Sheet As at December 31, 2021 Assets: Current Assets Cash $ 113,150 Prepaid Rent $ 1,920 Prepaid Insurance $ 2,940 Office Supplies $ 200 Racing Supplies $ 150 Total Current Assets $ 118,360 Non Current Assets Montain Bikes $ 18,200 Kayaks $ 20,900 Accumulated Depreciation $ (7,820) $ 31,280 Total Assets $ 149,640 Liabilities and Stockholder's Equity: Current Liabilities Accounts Payable Interest Payable Income Tax Payable Total Current Liabilities $ 2,700 $ 1,125 $ 13,800 $ 17,625 Non Current Liabilities Notes Payable (Long Term) $ 45,000 Total Liabilities $ 62,625 Stockholder's Equity Common Stock Retained Earnings $ 36,000 $ 51,015 Total Stockholder's Equity $ 87,015 Total Liabilities and Stockholder's Equity $ 149,640