Question

Problem Chapters 1-6 Help Required information The following information applies to the questions displayed below) 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 30.000 shares of common stock for $1 each. Each share of stock represents a unit of ownership Tory and Suzie will act as co-presidents of the company The following transactions occur from July 1 through December 31 Jul. 1 Sell $15,000 of common stock to Suzie. Jul. Sell $15,000 of connon stock to Tony. Jul. 1 Purchase a one-year insurance policy for $4,200 (350 per month) to cover injuries to participants during outdoor clinics. Jul. 2 Pay legal fees of $1,900 associated with incorporation. Jul. 4 Purchase office supplies of $1,300 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 550 on the day of the clinic. Jul. 8 Purchase 10 mountain bikes, paying $10,200 cash. Jul. 15 On the day of the clinic, Great Adventures receives cash of $3,000 from 50 bikers. Tony conducts the mountain biking clinic. Jul. 22 Because of the success of the first mountain bikine clinic, Tony holds another mountain biking clinic and the company receives $3,500. Jul. 24 Pay $940 to a local radio station for advertising to appear immediately. A kayaking clinic will be < Prev 8 9 10 11 of 16 !! Next >

Answer 1

Income statement

P S Q R Great Adventures Inc Income Statement 31-Dec-21 Revenue Service Revenue (clinic) 61800 Service revenue (racing 21600 Total Revenue 83400 Expenses 1900 1290 1700 2000 Legal Fees Advertising expense Miscellaneous expense Salary Depreciation Insurance expense Income tax expense Supplies expense Rent expense Interest expense Total expense 7000 2100 13400 3030 1520 1150 35090 Net Income 48310

Statement of shareholder'e equity

VW Great Adventures Inc Statement of stockholder's equity For the period ended December 31, 2021 Common Stock Retained Earnings Stockholder's Equity 30000 30000 -4800 -4800 48310 48310 30000 43510 73510 Issue shares for cash Cash Dividend Net income

Balance Sheet

AA AD Current Assets Cash Prepaid Insurance Prepaid rent Supplies AB AC Great Adventures Inc Balance sheet 31-Dec-21 Current Liabilities 111250 Accounts Payable 2100 Income tax payable 3040 Interest expense payable 470 Total current liabilites (C) Long term Liabilities Loan (D) 2500 13400 1150 17050 46000 63050 30000 43510 Total Current Assets (A) Long term assets Equipment Accumulated depreciation Total liabilites (C+D) Stockholder's equity 116860 Common stock Retained earnings 26700 -7000 19700 Total Stockholder's equity (E) (B) 73510 Total Assets (A-B) 136560 Total liabilities and stockholder's quity (C+D+E) 136560

Working Notes

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Working Notes Insurance expense for full year is 4200, hence for 6 months=4200*6/12 Rent Expense for full is 4560, hence for 4 months=4560*4/12 Interest calculation on loan where loan amount is 46000, rate is 6% and month for which interest is to be recognised is from Aug-Dec=46000*6/100*5/12