Question

Tony and Suzie graduate from college in May 2018 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, 2018, Tony and Suzie organize their new company as a corporation, Great Adventures Inc. The articles of incorporation state that the corporation will sell 21,000 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 business activities occur during July for Great Adventures.
  
Jul. 1 Sell $10,500 of common stock to Suzie.
Jul. 1 Sell $10,500 of common stock to Tony.
Jul. 1 Purchase a one-year insurance policy for $5,040 ($420 per month) to cover injuries to participants during outdoor clinics.
Jul. 2 Pay legal fees of $1,600 associated with incorporation.
Jul. 4 Purchase office supplies of $1,400 on account.
Jul. 7 Pay for advertising of $350 to a local newspaper for an upcoming mountain biking clinic to be held on July 15. Attendees will be charged $50 the day of the clinic.
Jul. 8    Purchase 10 mountain bikes, paying $11,500 cash.
Jul. 15 On the day of the clinic, Great Adventures receives cash of $3,500 from 70 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 $4,050.
Jul. 24 Pay for advertising of $940 to a local radio station for a kayaking clinic to be held on August 10. Attendees can pay $130 in advance or $180 on the day of the clinic.
Jul. 30 Great Adventures receives cash of $6,500 in advance from 50 kayakers for the upcoming kayak clinic.

Cash Prepaid Insurance 10,500 10,500 3,500 4,050 6,500 5,040 July1 1,600 July2 350 July 7 11,500 July 8 940 July 24 July 1 5,040 July 15 July 22 July 30 End. bal 5,040 End. bal 15,620 Supplies 1,400 Equipment 11,500 End. bal 1,400 End. bal 11,500 Accounts Payable Deferred Revenue 1,400 July 4 6,500 July 30 End. bal 1,400 End. bal 6,500 Common Stock Service Revenue 10,500 July 1 10,500 July 1 3,500 July 15 4,050 July 22 End. bal 21,000 End. bal 7,550 Advertising Expense Legal Fees Expense uly 2 July 7 July 24 350 940 1,600 End. bal 1,290 End. bal 1,600

Prepare a trial balance. (The items in the Trial Balance should be grouped as follows: Assets, Liabilities, Stockholders' Equity, Revenue and Expenses.)

Answer 1

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