Question

Post the closing enteries of retaiend earnings to the T-account.

Retu 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 25,000 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 $12,500 of common stock to Suzie. Jul. 1 Sell $12.500 of common stock to Tony. Jul. 1 Purchase a one-year insurance policy for $4,920 ($410 per month) to cover injuries to participants during outdoor elinies. Jul. 2 Pay legal fees of $1,700 associated with incorporation. Jul. 4 Purchase office supplies of $1,300 on account. Jul. 7 Pay for advertising of $220 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. Purchase 10 mountain bikes, paying $19,800 cash. Jul. 15 On the day of the clinic, Great Adventures receives cash of $2,000 from 50 bikers. Tony conducts the mountain biking alinie. Jul. 22 Because of the success of the first mountain biking elinie, Tony holds another mountain biking clinie and the company receives $2,400. Jul. 24 Pay $630 to a local radio station for advertising to appear immediately. A kayaking clinie will be held on August 10, and attendees can pay $110 in advance or $160 on the day of the clinic. Jul. 30 Great Adventures receives cash of $7,700 in advance from 70 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 66 annual interest is due each year on July 31. Aug. 4 The company purchases 14 kayaks, paying $11,000 cash. Aug. 10 Twenty additional kayakers pay $3,200 ($160 each), in addition to the $7,700 that was paid in advance < Prex 6 7 of 10 ! Next >

Answer 1

Great Adventures Journal Enteries Date Particulars 1.7.2021 Cash a/c Dr. To Common Stock (Being Equal no. of stock issued to Tony and Suzie) Debit in $Credit in $ 25000 25000 4920 1.7.2021 Prepaid Insurance a/c Dr. To Cash (Being Insurance paid in cash) 360 per month Trial Balance For the period ending 31.7.2021 Particulars Debit in $ Credit in $ Cash 9830 Prepaid Insurance 4920 Office Supplies 1300 Equipment(Bikes) 19800 Accounts Payable 1300 Common Stock 25000 Service revenue (Racing) 4400 Unearned Kayaking Service 7700 Legal Fees 1700 Advertising Expense 850 Totals 38400 38400 4920 1700 2.7.2021 Legal Fees a/c Dr. To Cash (Being Legal Fees paid in Cash) 1700 1300 4.7.2021 Office Supplies a/c Dr. To Accounts Payable (Being Supplies purchased on account) 1300 220 7.7.2021 Advertising Expense a/c Dr. To Cash (Being advertising expense paid to newspaper) 19800 8.7.2021 Mountain Bikes a/c Dr. To Cash (Being 10 Mountain Bikes purchased for cash) 19800 2000 15.7.2021 Cash a/c Dr. To Service revenue (Racing) (Being cash collected from Mountain Bike attendees) 2000 2400 22.7.2021 Cash a/c Dr. To Service revenue (Racing) (Being cash collected from Mountain Bike attendees) 2400 24.7.2021 Advertising Expense a/c Dr. To Cash (Being advertising expense paid to local radio station) 7700 30.7.2021 Cash a/c Dr. To Unearned Kayaking Service (Being Advance received for Kayaking service) 7700

Journal Enteries Date Particulars 1.8.2021 Cash a/c Dr. To Loan (Being Loan taken from city council) Debit in $ Credit in $ 36000 36000 4.8.2021 11000 Kayaks a/c Dr. To Cash (Kayaks purchased in cash) 11000 3200 7700 10.8.2021 Cash a/c Dr. Deferred revenue a/c Dr. To Service revenue (Clinic) (Being revenue recognized) 10900 11200 17.8.2021 Cash a/c Dr. To Service revenue (Clinic) 112001 1300 24.8.2021 Accounts Payable a/c Dr. To Cash (Being Accounts Payable paid in cash) 1300 2760 1.9.2021 Prepaid rent a/c Dr. To Cash (Being rent paid in cash) 230 per month 2760 132001 21.9.2021 Cash a/c Dr. To Service revenue (Clinic) (Being services performed for cash) 13200 18800 17.10.2021 Cash a/c Dr. To Service revenue (Clinic) (Being services performed for cash) 18800 1900 8.12.2021 Miscellaneous expense a/c Dr. To Cash (Being permit purchased in cash) 1900 2700 12.12.2021 Racing Supplies a/c Dr. To Accounts Payable |(Being Racing supplies purchased on account) 2700 248000 15.12.2021 Cash a/c Dr. To Service revenue (Racing) (Being services performed for cash) 24800 2400 16.12.2021 Salary expense a/c Dr. To Cash (Being salary paid to Victor in cash) 2400 3000 31.12.2021 Dividend a/c Dr. To Cash (Being dividend paid to Tony and Suzie) 3000 31.12.2021 No Entry

Adjusting Enteries Date Particulars 31.12.2021 Depreciation a/c Dr. To Accumulated Depreciation (Being depreciation charged to asset) Debit in $ Credit in $ 7200 72001 31.12.2021 Insurance expense a/c Dr. 24600 To Prepaid Insurance (Being Insurance expense charged to Prepaid insurance) 2460 31.12.2021 Rent expense a/c Dr. 1 920 To Prepaid Rent (Being rent expense charged to Prepaid Rent) 230 x 4 = 920 920 900 900 31.12.2021 Office Supplies expense a/c Dr. To Office Supplies |(Being Supplies expense charged to Office Supplies.) 1300-400 31.12.2021 Interest expense a/c Dr. To Interest payable 36000 * 6% * 5/12 (Being Interest expense accrued) 900 900 2410 31.12.2021 Racing Supplies expense a/c Dr. 2410 To Racing Supplies (Being racing supplies expense charged to racing supplies) 2700-290 31.12.2021 Income tax expense a/c Dr. 14500 To Income tax payable (Being income tax accrued) 14500 Closing Enteries Date Particulars 31.12.2021 Income Summary a/c Dr. To Advertising expense To Legal fees expense To Miscellaneous expense To Salary expense To Depreciation To Insurance expense To Rent expense To Office Supplies expense To Racing Supplies expense To Interest expense To Income tax expense (Being expenses closed to Income summary) Debit in $ Credit in $ 36140 850 1700 1900 2400 7200 2460 920 900 2410 900 14500 78900 4400 31.12.2021 Service revenue (Clinic) a/c Dr. Service revenue (Racing) a/c Dr. To Income Summary (Being Revenues closed to Income summary) 83300 47160 31.12.2021 Income Summary a/c Dr. To Retained Earnings |(Being profit transferred to retained earnings) 47160 3000 31.12.2021 Retained Earnings a/c Dr. To Dividends (Being dividends charge to Retained Earnings) 3000

Adjusted Trial Balance As at 31.12.2021 Adjusted Post Closing Debit in $ Credit in $ Debit in $ Credit in $ Particulars Assets Cash 94670 2460 1840 400 290 19800 94670 2460 1840 400 290 19800 7200 7200 11000 11000 2700 900 14500 2700 900 14500 36000 36000 25000 25000 44160 Prepaid insurance Prepaid rent Supplies (Office) Racing Supplies Equipment(Bikes) Accumulated Depreciation Kayaks Liabilities Accounts payable Interest payable Income tax payable Deferred revenue Loan Equity Common stock Retained Earnings Dividend Revenue Service revenue (Clinic) Service revenue (Racing) Expenses Advertising expense Legal fees expense Miscellaneous expense Salary expense Depreciation Insurance expense Rent expense Office Supplies expense Racing Supplies expense Interest expense Income tax expense Total 3000 78900 4400 850 1700 1900 2400 7200 2460 920 900 2410 900 14500 169600 169600 1 30460 130460 Retaned Earnings Dividends 3000 Bal Income Summary Bal. 44160 47160 47160 47160

78900 4400 83300 Statement of Income For the period ending 31.12.2021 Service revenue (Clinic) Service revenue (Racing) Totals Less: Advertising expense Legal fees expense Miscellaneous expense Salary expense Depreciation Insurance expense Rent expense Office Supplies expense Racing Supplies expense Interest expense Income tax expense Net Income 850 1700 1900 2400 7200 2460 920 900 2410 900 14500 36140 47160 Statement of Retained Earnings Net Income Less:Dividends 31.12.2021 47160 -3000 44160 Statement of Retained Earnings For the period ending 31.12.2021 1.8.2021 Add:Net Income Less:Dividends Common Retained Total Stock Earnings Equity 25000 25000 4716047160 -3000 -3000 25000 44160 69160

Amounts in $ Amounts in $ Balance sheet As at 31.12.2021 Assets Current Assets Cash Prepaid insurance Prepaid rent Supplies (Office) Racing Supplies Amounts in $ Amounts in $ Liabilities Current Liabilities 94670 Accounts payable 2460 Interest payable 1840 Income tax payable 400 290 99660 Non Current Liabilities Loan 2700 900 14500 18100 36000 Non Current Assets Equipment(Bikes) Kayaks Accumulated Depreciation Total Assets 19800 11000 -7200 Shareholders Equity Common stock 25000 23600 Retained Earnings 44160 123260 Total Liabilities & Shareholders Eq. 69160 123260