Tony and Suzie graduate from college in May 2024 and began developing their new business.They began by offering clinics for basic outdoor activities such as Mountain biking or Kayaking.
Tony and Suzie graduate from college in May 2024 and began developing their new business. They began 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 check post to the next using a combination of Kayaking,
mountain biking ,orienteering and trail running. In a long run, they plan to sell outdoor gear and develop a ropes course for outdoor enthusiasts.
On July 1,2024,Tony and Suzie organize their new company as a corporation ,Great Adventure Inc. The articles of incorporation states that the corporation, Great Adventures Inc. The articles
of incorporation state that the corporation will sell 28,000 shares of common stock for $1 each. Each share of stock represents a unit of ownership. Tony and Suzie will act as a co-presidents
of the company. The following transactions occur from July1 through December 31st.
July 1 : Sell $14,000 of common stock to Suzie.
July 1: Sell $14000 of common stock to Tony.
July 1:Purchase a one-year insurance policy for $4,320 ($360 per month) to cover injuries to participants during outdoor clinics.
July 2: Pay legal fees of $1,400 associated with incorporation.
July 4: Purchase office supplies of $1600 on account.
July 7: Pay for advertising of $230 to a local newspaper for an upcoming mountain biking clinic to be held on July 15. Attendees will be charged $50 on the day of the clinic.
July 8: Purchase 10 mountain bikes, paying $10,100 cash.
July 15: On the day of the clinic,Great Adventure receives cash of $3,500 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 $3,950.
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 $100 in advance or $150 on the day of the
clinic.
Jul 30: Great Adventures receives cash of $5,000 in advance from 60 kayakers for the upcoming kayak clinic.
Aug 1: Great Adventures obtains a $45,000 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 $22100 cash.
Aug 10: Twenty additional kayakers pay $3,000 , in addition to the $5,000 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 $11,100 cash.
Aug 24:Office supplies of $1,600 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 $4,440 ($370 per month) in advance.
Sep 21: Tony conducts a rock-climbing clinic. The company receives $14,700 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 $18,300 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 $550.
Dec. 5 :To help organize and promote the race, Tony hires his college roommate, Victor. Victor will be paid $30 in salary for each team that competes in the race. His salary will be paid after the race.
Dec. 8 :The company pays $1,600 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 $2,400 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 $22,000 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 $4,000 ($2000 to Tony and $2000to Suzie).
Dec. 31 Using his personal money, Tony purchases a diamond ring for $4,800. 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 $8,800.
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 $1,600 of office supplies purchased on July 4, $250 remains.
5 )Interest expense on the $45,000 loan obtained from the city council on August 1 should be recorded.
6 )Of the $2,400 of racing supplies purchased on December 12, $220 remains.
7) Suzie calculates that the company owes $14,800 in income taxes.
Requirements :
1) Prepare Journal Entries
2) Prepare Adjusting Journal Entries
3) Prepare T-Accounts
4) Prepare Unadjsting Trial Balance
5) Prepare Adjusted Trial Balance
6) Prepare 10 Column Worksheet
7) Prepare Income Statement
8) Prepare Statement of Stockholder's Equity
9) Prepare Balance Sheet
10) Prepare Post Closing Entries
11) Prepare Post Closing Trial Balance