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 39,000 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 $19,500 of common stock to Suzie.
Jul.		1		Sell $19,500 of common stock to Tony.
Jul.		1		Purchase a one-year insurance policy for $4,560 ($380 per month) to cover injuries to participants during outdoor clinics.
Jul.		2		Pay legal fees of $1,100 associated with incorporation.
Jul.		4		Purchase office supplies of $1,900 on account.
Jul.		7		Pay for advertising of $300 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.
Jul.		8		Purchase 10 mountain bikes, paying $10,300 cash.
Jul.		15		On the day of the clinic, Great Adventures receives cash of $4,200 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 $4,550.
Jul.		24		Pay $760 to a local radio station for advertising to appear immediately. A kayaking clinic will be held on August 10, and attendees can pay $120 in advance or $170 on the day of the clinic.
Jul.		30		Great Adventures receives cash of $4,800 in advance from 40 kayakers for the upcoming kayak clinic.
Aug.		1		Great Adventures obtains a $49,000 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 6% annual interest is due each year on July 31.
Aug.		4		The company purchases 14 kayaks, paying $18,700 cash.
Aug.		10		Twenty additional kayakers pay $3,400 ($170 each), in addition to the $4,800 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 $10,500 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 $2,640 ($220 per month) in advance.
Sep.		21		Tony conducts a rock-climbing clinic. The company receives $14,600 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 $18,500 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 $570.
Dec.		5		To help organize and promote the race, Tony hires his college roommate, Victor. Victor will be paid $60 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 $2,200 on account due in 30 days. Supplies include trophies for the top-finishing teams in each category, promotional shirts, snack foods and drinks for participants, and field markers to prepare the racecourse.
Dec.		15		The company receives $22,800 cash from a total of forty teams, and the race is held.
Dec.		16		The company pays Victor’s salary of $2,400.
Dec.		31		The company pays a dividend of $3,400 ($1,700 to Tony and $1,700 to Suzie).
Dec.		31		Using his personal money, Tony purchases a diamond ring for $5,400. Tony surprises Suzie by proposing that they get married. Suzie accepts and they get married!

The following information relates to year-end adjusting entries as of December 31, 2021.

1. Depreciation of the mountain bikes purchased on July 8 and kayaks purchased on August 4 totals $7,200.
2. Six months’ of the one-year insurance policy purchased on July 1 has expired.
3. Four months of the one-year rental agreement purchased on September 1 has expired.
4. Of the $1,900 of office supplies purchased on July 4, $320 remains.
5. Interest expense on the $49,000 loan obtained from the city council on August 1 should be recorded.
6. Of the $2,200 of racing supplies purchased on December 12, $130 remains.
7. Suzie calculates that the company owes $14,900 in income taxes

Credit 6,000 14,900 GREAT ADVENTURES, Inc. Adjusted Trial Balance December 31, 2021 Accounts Debit Cash Prepaid Insurance 4,560 Prepaid Rent 2.640 Supplies (Office) 1,900 Supplies (Racing) 2,200 Equipment (Bikes) 10,300 Equipment (Kayaks) 18,700 Accumulated Depreciation 7,200 Accounts Payable Income Tax Payable Interest Payable Notes Payable Common Stock Dividends 3,400 Service Revenue (Clinic) 52,350 Service Revenue (Racing) 22,800 Advertising Expense Depreciation Expense Income Tax Expense 14,900 Insurance Expense 4,560 Interest Expense Legal Fees Expense 1,100 Miscellaneous Expense Rent Expense 2.640 Salries Expense 2.400 Supplies Expense (Office) Supplies Expense (Racing) Totals $ 151,650 49,000 39,000 $ 108,900

Can someone please assist with these? This is very difficult in my opinion.

Answer 1

Great Adventures Inc. Journal entries No. Date Accounts 1 1-Jul Cash Common Stock Credit Calculation Debit 19,500 19,500 19,500 1-Jul Cash Common Stock 19,500 3 4,560 1-Jul Prepaid Insurance Cash 4,560 4 1,100 2-Jul Legal fees expense Cash 1,100 1,900 4-Jul Supplies (Office) Accounts Payable 1,900 300 7-Jul Advertising expense Cash 300 7 10,300 8-Jul Equipment (Bikes) Cash 10,300 8 4,200 15-Jul Cash Service revenue (Clinic) 4,200 9 4,550 22-Jul Cash Service revenue (Clinic) 4,550 10 760 24-Jul Advertising expense Cash 760 11 4,800 30-Jul Cash Deferred Revenue 4,800 49,000 121-Aug Cash Notes Payable 49,000 13 18,700 4-Aug Equipment (Kayaks) Cash 18,700 14 10-Aug Cash Deferred Revenue Service revenue (Clinic) 3,400 4,800 8,200 15 10,500 17-Aug Cash Service revenue (Clinic) 10,500 16 1,900 24-Aug Accounts Payable Cash 1,900 17 1-Sep Prepaid Rent 2,640 Cash 2,640 18 14,600 21-Sep Cash Service revenue (Clinic) 14,600 19 18,500 17-Oct Cash Service revenue (Clinic) 18,500 20 1-Dec No entry 21 5-Dec No entry 22 1,300 8-Dec Misc expense Cash 1,300 23 2,200 12-Dec Supplies (Racing) Accounts Payable 2,200 24 22,800 15-Dec Cash Service revenue (Racing) 22,800 25 2,400 16-Dec Salary expense Cash 2,400 26 3,400 31-Dec Dividends Cash 3,400 27 31-Dec No entry Credit Calculation Adjusting entries No. Date Accounts 28 31-Dec Depreciation expense Accumulated Depreciation Debit 7,200 7,200 29 2,280 -4,560/12*6 31-Dec Insurance expense Prepaid Insurance 2,280 30 880 =2,640/12*4 31-Dec Rent expense Prepaid Rent 880 31 1,580 =1,900-320 31-Dec Supplies (Office) expense Supplies (Office) 1,580 32 1,225 -49,000*6%*5/12 31-Dec Interest expense Interest Payable 1,225 33 2,070 =2,200-130 31-Dec Supplies (Racing) expense Supplies (Racing) 2,070 34 14,900 31-Dec Income tax expense Income tax payable 14,900 Credit Calculation Closing entries No. Date Accounts 35 31-Dec Service revenue (Clinic) Service revenue (Racing) Retained Earnings Debit 60,550 22,800 83,350 36 35,995 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 1,060 1,100 1,300 2,400 7,200 2,280 880 1,580 2,070 1,225 14,900 37 3,400 31-Dec Retained Earnings Dividends 3,400

Credit Date Credit Date Credit Date Credit Debit Date Prepaid Insurance 4,560 31-Dec Debit Date Prepaid Rent 2,640 31-Dec Debit Date Supplies (Office) 1,900 31-Dec 1-Jul 2,280 1-Sep 880 4-Jul 1,580 Great Adventures Inc. T Accounts Date Debit Date Cash 1-Jul 19,500 1-Jul 1-Jul 19,500 2-Jul 15-Jul 4,200 7-Jul 22-Jul 4,550 8-Jul 30-Jul 4,800 24-Jul 1-Aug 49,000 4-Aug 10-Aug 3,400 24-Aug 17-Aug 10,500 1-Sep 21-Sep 14,600 8-Dec 17-Oct 18,500 16-Dec 15-Dec 22,800 31-Dec 4,560 1,100 300 10,300 760 18,700 1,900 2,640 1,300 2,400 3,400 Bal. Bal. Bal. Bal. 123,990 Supplies (Racing) 2,200 31-Dec 2,280 Equipment (Bikes) 10,300 1,760 Equipment (Kayaks) 18,700 320 Accum. Depreciation 31-Dec 12-Dec 2,070 8 -Jul 4-Aug 7,200 Bal. 130 Bal. Bal. Bal. 7,200 10,300 Deferred Revenue 4,800 30-Jul Accounts Payable 1,900 4-Jul 12-Dec 18,700 Interest Payable 31-Dec 24-Aug 10-Aug 4,800 1,225 Income taxes payable 31-Dec 1,900 2,200 14,900 Bal. 2,200 Bal. 1,225 Bal. 14,900 Notes Payable 1-Aug Bal. Dividends 3,400 31-Dec Common Stock 1-Jul 1-Jul 49,000 31-Dec 83,350 19,500 19,500 Retained Earnings 31-Dec 35,995 3,400 3,400 31-Dec 31-Dec 49,000 39,000 Bal. 43,955 Service revenue (Racing) 16-Dec Bal. Legal fees expense 1,100 22,800 Advertising expense 300 760 7-Jul 24-Jul 2-Jul Bal. Service revenue (Clinic) 15-Jul 22-Jul 10-Aug 17-Aug 21-Sep 31-Dec 60,550 17-Oct 4,200 4,550 8,200 10,500 14,600 18,500 31-Dec 22,800 31-Dec 1,060 31-Dec 1,100 Bal. Bal. Bal. 8-Dec Bal. Misc expense 1,300 31-Dec 16-Dec Salary expense 2,400 31-Dec 31-Dec Depreciation expense 7,200 31-Dec 31-Dec Insurance expense 2,280 31-Dec 1,300 2,400 7,200 2,280 Bal. Bal. Bal. 31-Dec Rent expense 880 31-Dec Bal. Supplies (Office) expense 31-Dec 1,580 31-Dec Supplies (Racing) expense 31-Dec 2,070 31-Dec 31-Dec Interest expense 1,225 31-Dec 880 1,580 2,070 1,225 Bal. Bal. - Bal. 31-Dec Income tax expense 14,900 31-Dec 14,900 Bal.

Unadjusted TB As of Dec Debit Credit 123,990 4,560 2,640 1,900 2,200 10,300 18,700 Adjusted TB As of Dec Debit Credit 123,990 2,280 1,760 320 130 10,300 18,700 7,200 2,200 Post closing TB As of Dec Debit Credit 123,990 2,280 1,760 320 130 10,300 18,700 7,200 2,200 2,200 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 1,225 14,900 49,000 39,000 49,000 39,000 1,225 14,900 49,000 39,000 43,955 3,400 3,400 60,550 22,800 60,550 22,800 1,060 1,100 1,300 2,400 1,060 1,100 1,300 2,400 7,200 2,280 880 1,580 2,070 1,225 14,900 196,875 173,550 173,550 196,875 157,480 157,480

60,550 22,800 83,350 Great Adventures Inc. Income Statement For the Period Ended December 31, 2021 Revenues Service revenue (Clinic) Service revenue (Racing) Total Revenues Expenses: Advertising expense Legal fees expense Misc expense Salary expense Depreciation expense Insurance expense Rent expense Supplies (Office) expense Supplies (Racing) expense Interest expense Total Expenses Net Income before income taxes Income taxes Net Income 1,060 1,100 1,300 2,400 7,200 2,280 880 1,580 2,070 1,225 21,095 62,255 14,900 47,355

Great Adventures Inc. Statement of Stockholders Equity For the Period Ended December 31, 2021 Common Stock Retained Earnings Total Equity 39,000 Beginning balance Issue of common stock Net Income Dividends Ending Balance 47,355 (3,400) 43,955 39,000 47,355 (3,400) 82,955 39,000

Great Adventures Inc. Balance Sheet As of December 31, 2021 Assets Current Assets: Cash Prepaid Insurance Prepaid Rent Supplies (Office) Supplies (Racing) Total Current Assets Liabilities Current Liabilities: 123,990 Accounts Payable 2,280 Interest Payable 1,760 Income taxes payable 320 Total Current Liabiltiies 130 128,480 Non-Current Liabilities: Notes Payable Total Liabilities 2,200 1,225 14,900 18,325 49,000 67,325 Long-term Assets: Equipment (Bikes) Equipment (Kayaks) Accumulated Depreciation Total Long-term Assets Stockholders Equity: 10,300 Common stock 18,700 Retained Earnings (7,200) 21,800 Total Stockholders Equity 39,000 43,955 82,955 Total Assets 150,280 Total Liabilities & Stockholders Equity 150,280

Date Debit Credit Retained Earnings 31-Dec 83,350 31-Dec 35,995 31-Dec 3,400 43,955