Question

5 Required information Great Adventures Problem AP3-1 [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 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. es 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 $4,680 ($390 per month) to cover injuries to participants during outdoor clinics. Jul. 2 Pay legal fees of $1,800 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. 8 Purchase 10 mountain bikes, paying $18,500 cash. Jul. 15 on the day of the clinic, Great Adventures receives cash of $2,000 from 50 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 $2,550. Jul. 24 Pay $660 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 $7,200 in advance from 60 kayakers for the upcoming kayak clinic. < Prev 4 5 6 of 6 HH Next >

Answer 1

1. Adjusted Trial Balance -

Credit Great Adventures Inc. Adjusted Trial Balance December 31, 2021 Account Titles Debit Cash $ 95,370 Prepaid Rent $ 1,680 Prepaid Insurance $ 2,340 Supplies (Office) $ 380 Supplies (Racing) $ 270 Equipment (Bikes) $ 18,500 Equipment (Kayaks) $ 20,000 Accumulated Depreciation Accounts Payable Interest Payable Income Tax Payable Notes Payable Common Stock Dividend $ 3,300 Service Revenue (Clinic) Service Revenue (Racing) Legal Fees Expenses $ 1,800 Advertising Expense $ 880 Miscelleneous Expense $ 1,700 Salary Expense $ 2,000 Depreciation Expenses $ 8,500 Insurance Expenses $ 2,340 Rent Expenses $ 840 Supplies Expenses (Office) $ 920 Interest Expenses $ 775 Supplies Expenses (Racing) $ 1,830 Income Tax Expenses $ 13,900 $ 8,500 $ 2,100 $ 775 $ 13,900 $ 31,000 $ 36,000 $ 61,450 $ 23,600 Total $177,325 $177,325

2. 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 $ 4,680 Cash $ 4,680 (Being Insurance paid for 1 year in advance) Jul 2 Legal Fees Expense $ 1.800 Cash (Being Legal Fees paid in cash) $ 1,800 Jul 4 Supplies (Office) $ 1,300 Accounts Payable $ (Being Supplies (Office) purchased on account) 1,300 Jul 7 220 Advertising Expense $ Cash (Being advertising Fees Paid) $ 220 Jul 8 Equipment (Bikes) $ 18,500 Cash (Being 10 mountain bikes purchased) $ 18,500 Jul 15 Cash $ 2,000 Service Revenue (Clinic) $ 2,000 (Being Cash received on mountain bike clinic) Jul 22 Cash $ 2,550 Service Revenue (Clinic) $ 2,550 (Being Cash received on mountain bike clinic) Jul 24 660 Advertising Expense $ Cash (Being advertising Fees Paid) $ 660 Jul 30 Cash $ 7,200 Unearned Revenue (Being advance revenue received) $ 7,200 Aug 1 Cash $ 31,000 Notes Payable (Being Loan taken for 3 years) $ 31,000 Aug 4 Equipment (Kayaks) $ 20,000 Cash (Being Equipment (Kayaks) Purchased) $ 20,000 Aug 10 Cash $ 3,400 Unearned Revenue $ 7,200 Service Revenue (Clinic) $ 10,600 (Being Equipment (Kayaks) clinic provided) Aug 17 Cash $ 12,200 Service Revenue (Clinic) $ 12,200 (Being Equipment (Kayaks) clinic provided) Aug 24 Accounts Payable $ 1,300 Cash (Being Accounts Paid on account) $ 1,300 Sept 1 Prepaid Rent $ 2,520 Cash (Being Rent paid in advance for an year) $ 2,520 Sept 21 Cash $ 14,500 Service Revenue (Clinic) (Being Clinic service provided) $ 14,500 Oct 17 Cash $ 19,600 Service Revenue (Clinic) (Being Clinic service provided) $ 19,600 Dec 1 No Entry Dec 5 No Entry Dec 8 Miscelleneous Expense $ 1,700 Cash (Being Permit purchased to conduct race) $ 1,700 Dec 12 Supplies (Racing) $ 2,100 Accounts Payable (Being Supplies purchased on account) $ 2,100 Dec 15 Cash $ 23,600 Service Revenue (Racing) (Being tournament race revenue) $ 23,600 Dec 16 Salary Expense $ 2,000 Cash (Being victors Salary Paid) $ 2,000 Dec 31 $ 3,300 Dividend Cash $ 3,300 (Being dividend Paid) Dec 31 No Entry

3. Adjusting Entries -

Great Adventures Inc. Adjusting Entries Date Account Titles Debit Credit a Depreciation Expenses $ 8,500 Accumulated Depreciation $ 8,500 (Being depreciation provided on bikes and Equipment (Kayaks) b Insurance Expenses $ 2,340 Prepaid Insurance (Being Insurance for 6 months expired) $ 2,340 C Rent Expenses $ 840 Prepaid Rent $ (Being rent expenses for 4 months incurred) 840 d Supplies Expenses (Office) $ 920 Supplies (Office) (Being Supplies (Office) utilised) $ 920 e 775 Interest Expenses $ 775 Interest Payable $ (Being Interest Charged on the noted payable) ($31,000*6%*5/12) f Supplies Expenses (Racing) $ 1,830 Supplies (Racing) (Being supplies utilised) $ 1,830 Income Tax Expenses $ 13,900 Income Tax Payable (Being income tax incurred) $ 13,900