Question

Project Seved their first adventure races. These races wil 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 Surle organize their new company as a corporation, Great Adventures Inc. The articles of incorporation state that the corporation will sell 34,000 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 through December 31, 1 Bell 417,000 of common stock to use 1 Bell 417,000 of common stock to Tony 1 Purehase a one-year insurance policy for $5,000 (5470 per month) to cover injuries to participants during door elinies. Jal. May legal fees of $1,600 associated with incorporation 4 Purehase office applies of $1,800 on account. 7 Pay for advertising to local nevpaper for an upcoming mountain biking clinie to be held on July 15. Attendees will be charged $38 on the day of the elinie. # Purchase 10 mountain bikes, paying 515,600 cash. Jal. 15 on the day of the elite, Great ventures receives eash of $2,400 from 80 bikers. Tony conduct the mountain biking elinie. Jul. 22 Because of the weess of the first mountain biking clinie, Tony holds another mountain biking elinie and the company receives $2,750. Jul. 24 May 3730 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 elinie. Jul. 10 Creat Adventures receives cash of $7,200 in advance from 60 kayakere for the upcoming kayak elinie. Aug. 1 Great Adventures obtains a 547,000 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 annual Interest is due each year on July 31. 4 The company purchases 14 kayaks, paying $22,00 cash. Ang. 10 Twenty additional kayakore pay $3,400 ($170 each), in addition to the $7,200 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 $12,500 cash. Aug. 24 office supplies of $1,000 purchased on July 4 are paid in full. Sep. To provide better storage of mountain bikes and kayaks when not in we, the company renta storage shed for one year, paying $3,480 ($290 per month) in advance. Sep. 21 Tony conducta a rock-climbing elinie. The company receives $14,800 cash. Oct. 17 Tony conducta as orienteering clinic. Participants practice how to understand a topographical map. read an altimeter, we a compass, and orient through heavily wooded areas. The company receives $19,100 cash. Dee. Tony decides to hold the company's first adventure race on December 15. Four-person teams will race fron checkpoint to checkpoint using a combination of mountain biking, kayaking, orienteering, trail Tuning, and rock-climbing kills. The first tean in each category to complete all checkpoints in order wine. The entry fee for each team is $500. Dec. 5 To help organize and promote the race, Tony hires his college roommate, Victor. Victor will be paid $30 in salary each tean that competes in the race. His salary will be paid after the race. Dec. 8 The company pays $1,500 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 $2.500 on account due in 30 days. Bupplies include trophies for the top-finishing teams in each category, promotional shirts, snack foods and drinks for participants, and field markets to prepare the racecourse. Dec. 15 The company receives $20,000 cash from a total of forty tem, and the race is held. Dec. 16 The company pays Vietor'. walary of $1,200. Dec. 31 The company pays a dividend of $3,200 ($1,600 to Tony and $1.600 te sexie. Dec. 31 sing his personal money, Tony purchases a diamond ring for $5,000. Tony surprises sur le by proposing that they get married. Suale accepts and they get married The following information relates to year-end adjusting entries as of December 31, 2021 a. Depreciation of the mountain bikes purchased on July 8 and kayaks purchased on August 4 totals $7,600. b. Six months of the one-year insurance policy purchased on July 1 has expired. c. Four months of the one-year rental agreement purchased on September 1 has expired d. Of the $1,800 of office supplies purchased on July 4, 5210 remains Interest expense on the $47,000 loan obtained from the city council on August 1 should be recorded. . Of the $2,300 of racing supplies purchased on December 12, $130 remains 9. Suzie calculates that the company owes $14,100 in income taxes 2. Record adjusting entries as of December 31, 2021 Of no entry is required for a transaction/event, select "No journal entry required in the first account field.)

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 $ 34000 34000 Debit in $ Credit in $ 23050 5040 1800 15600 Dr. 5040 1.7.2021 Prepaid Insurance a/c To Cash (Being Insurance paid in cash) Trial Balance For the period ending 31.7.2021 Particulars Cash Prepaid Insurance Office Supplies Equipment(Bikes) Accounts Payable Common Stock Mountain Biking Service Unearned Kayaking Service Legal Fees Advertising Expense Totals 5040 1800 34000 5150 1600 7200 2.7.2021 Legal Fees a/c Dr. To Cash (Being Legal Fees paid in Cash) 16001 1600 1060 48150 48150 Dr. 1800 4.7.2021 Office Supplies a/c To Accounts Payable (Being Supplies purchased on account) 1800 330 7.7.2021 Advertising Expense a/c Dr. To Cash (Being advertising expense paid to newspaper) 330 15600 8.7.2021 Mountain Bikes a/c Dr. To Cash (Being 10 Mountain Bikes purchased for cash) 15600 2400 15.7.2021 Cash a/c Dr. To Mountain Biking Service (Being cash collected from Mountain Bike attendees) 2400 2750 22.7.2021 Cash a/c Dr. To Mountain Biking Service (Being cash collected from Mountain Bike attendees) 2750 730 24.7.2021 Advertising Expense a/c Dr. To Cash (Being advertising expense paid to local radio station) 730 7200 30.7.2021 Cash a/c Dr. To Unearned Kayaking Service (Being Advance received for Kayaking service) 7200

Journal Enteries Date Particulars 1.8.2021 Cash a/c Dr. To Loan (Being Loan taken from city council) Debit in $ Credit in $ 47000 47000 22000 4.8.2021 Kayaks a/c Dr. To Cash (Kayaks purchased in cash) 22000 3400 7200 10.8.2021 Cash a/c Dr. Deferred revenue a/c Dr. To Service Revenue (Being revenue recognized) 10600 12500 17.8.2021 Cash a/c Dr. To Service Revenue 12500 1800 24.8.2021 Accounts Payable a/c Dr. To Cash (Being Accounts Payable paid in cash) 1800 3480 1.9.2021 Prepaid rent a/c Dr. To Cash (Being rent paid in cash) 290 3480 14800 21.9.2021 Cash a/c Dr. To Service Revenue (Being services performed for cash) 14800 19100 17.10.2021 Cash a/c Dr. To Service Revenue (Being services performed for cash) 19100 1500 8.12.2021 Miscellaneous expense a/c Dr. To Cash (Being permit purchased in cash) 1500 2300 12.12.2021 Racing Supplies a/c Dr. To Accounts Payable (Being Racing supplies purchased on account) 2300 20000 15.12.2021 Cash a/c Dr. To Service Revenue (Being services performed for cash) 20000 1200 16.12.2021 Salary expense a/c Dr. To Cash (Being salary paid to Victor in cash) 1200 3200 31.12.2021 Dividend a/c Dr. To Cash (Being dividend paid to Tony and Suzie) 3200 31.12.2021 No Entry

Adjusting Enteries Date Particulars 31.12.2021 Depreciation a/c To Accumulated Depreciation (Being depreciation charged to asset) Dr Debit in $Credit in $ 7600 7600 31.12.2021 Insurance expense a/c Dr. 2520 To Prepaid Insurance (Being Insurance expense charged to Prepaid insurance) 2520 31.12.2021 Rent expense a/c Dr. 1160 To Prepaid Rent (Being rent expense charged to Prepaid Rent) 290 x 4 = 1160 1160 1590 1590 31.12.2021 Office Supplies expense a/c Dr. To Office Supplies (Being Supplies expense charged to Office Supplies.) (1800 - 210 ) 31.12.2021 Interest expense a/c Dr. To Interest payable 47000 * 6% * 5/12 (Being Interest expense accrued) 1175 1175 2170 31.12.2021 Racing Supplies expense a/c Dr. 2170 To Racing Supplies (Being racing supplies expense charged to racing supplies) ( 2300 - 130 ) 31.12.2021 Income tax expense a/c Dr. 14100 To Income tax payable (Being income tax accrued) 14100 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 $ 35675 1060 1600 1500 1200 7600 2520 1160 1590 2170 1175 14100 821501 31.12.2021 Service revenue (Clinic) a/c Dr. To Income Summary (Being Revenues closed to Income summary) 82150 46475 31.12.2021 Income Summary a/c Dr. To Retained Earnings (Being profit transferred to Retained earnings) 46475 32001 31.12.2021 Retained Earnings a/c Dr. To Dividends (Being dividends charge to Retained Earnings) 3200

Adjusted Trial Balance As at 31.12.2021 82150 Adjusted Post Closing Debit in $ Credit in $ Debit in $ Credit in $ 1060 106670 2520 106670 2520 2320 210 1600 1500 1200 2320 Statement of Income For the period ending 31.12.2021 Service revenue (Clinic) 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 210 7600 130 130 2520 15600 15600 1160 7600 7600 22000 22000 1590 2170 1175 2300 2300 14100 35675 1175 1175 46475 14100 14100 0 47000 47000 Particulars Assets Cash 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) 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 Statement of Retained Earnings Net Income Less:Dividends 31.12.2021 46475 -3200 43275 34000 34000 43275 3200 82150 1060 1600 1500 1200 7600 2520 1160 1590 2170 1175 14100 188325 188325 149450 149450 0 0 0 Retaned Earnings Dividends 3200 Bal Income Summary Bal. 43275 46475 46475 46475

Amounts in $ Amounts in $ Balance sheet As at 31.12.2021 Assets Current Assets Cash Prepaid insurance Prepaid rent Supplies (Office) Racing Supplies 2300 Amounts in $ Amounts in $ Liabilities Current Liabilities 106670 Accounts payable 2520 Interest payable 2320 Income tax payable 210 130 111850 Non Current Liabilities Loan 1175 14100 17575 47000 15600 Non Current Assets Equipment(Bikes) Kayaks Accumulated Depreciation Total Assets 22000 34000 Shareholders Equity Common stock 30000 Retained Earnings 141850 Total Liabilities & Shareholders Eq. -7600 43275 77275 141850