2 Part 2 of 8 2.22 points eBook Print On July 1, 2018. Tony and Suzie organize their new company as a corporation, Great Adventures Inc. The following transactions occur from August 1 through December 31. Also, the balances are provided for the month ended July 31. The articles of incorporation state that the corporation will sell 40,000 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 business activities occur during July for Great Adventures. Jul. 1 Sell $20,000 of common stock to Suzie. Jul. 1 Sell $20,000 of common stock to Tony. Jul, 1 Purchase a one-year Insurance policy for $4,080 ($340 per month) to cover injuries to participants during outdoor clinics Jul 2 Pay legal fees of $1.500 associated with incorporation Jul. 4 Purchase office supplies of $1,300 on account Jul. 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 the day of the clinic Jul. 8 Purchase 10 mountain bikes, paying $19,600 cash. Jul 15 on the day of the clinic, Great Adventures receives cash of $2,500 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 $3,050. Jul. 24 Pay for advertising of $680 to a local radio station for a kayaking clinic to be held on August 10. Attendees can pay $140 in advance or $190 on the day of the clinic Jul. 30 Great Adventures receives cash of $8,400 in advance from 60 kayakers for the upcoming kayak clinic Aug. 1 Great Adventures obtains a $47,000 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 $20,400 cash. Aug. 10 Twenty additional kayakers pay $3,800 ($190 each), in addition to the $8,400 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 $1,300 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, purchasing a one-year rental policy for $3,120 ($260 per month). Sep 21 Tony conducts a rock-climbing clinic. The company receives $14,800 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 $18,700 cash. Nor 1 Tanu Haride in hold therman's first aruante rarann Merembar 15 Funerantanme will rare from References altimeter, use a compass, and orient through heavily wooded areas. The company receives $18,700 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 $620.Dec. 5 To help organize and promote the race, Tony hires his college roommate, Victor. Victor will be paid $50 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 $2,900 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 $24,800 cash from a total of forty teams, and the race is held.Dec. 16 The company pays Victor's salary of $2,000. Dec 31 The company pays a dividend of $3,700 ($1,850 to Tony and $1,850 to Suzie). Dec. 31 Using his personal money, Tony purchases a diamond ring for $4,400. 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, 2018. a. Depreciation of the mountain bikes purchased on July 8 and kayaks purchased on August 4 totals $8,900. b. Six months' worth of insurance has expired. c. Four months' worth of rent has expired. d. Of the $1,300 of office supplies purchased on July 4, $370 remains. e. Interest expense on the $47,000 loan obtained from the city council on August 1 should be recorded. f. Of the $2,900 of racing supplies purchased on December 12, $290 remains. g. Suzie calculates that the company owes $13,700 in income taxes. Assume the following ending balances for the month of July. Balance Cash $ 27,860 Prepaid insurance 4,080 Supplies (Office) 1,300 Equipment (Bikes) 19,600 Accounts payable 1,300 Deferred revenue 8,400 Common stock 40,000 Service revenue (Clinic) 5,550 Advertising expense 910 4 EAA 2 3 4 L. I vu HUIUIS WII UI CI HA CAPIU. d. Of the $1,300 of office supplies purchased on July 4, $370 remains. e. Interest expense on the $47,000 loan obtained from the city council on August 1 should be recorded. f. Of the $2,900 of racing supplies purchased on December 12, $290 remains. g. Suzie calculates that the company owes $13,700 in income taxes. Assume the following ending balances for the month of July. Balance Cash $ 27,860 Prepaid insurance 4,080 Supplies (Office) 1,300 Equipment (Bikes) 19,600 Accounts payable 1,300 Deferred revenue 8,400 Common stock 40,000 Service revenue (Clinic) 5,550 Advertising expense 910 Legal fees expense 1,500 2. Record adjusting entries as of December 31, 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 8 View transaction list View journal entry worksheet No General Journal Credit Date Dec 31, 2018 Debit 8.900 1 Depreciation expense Supplies (Racing) 8.900 2 Dec 31, 2018 2,220 Insurance expense Prepaid insurance 2,220 3 Dec 31, 2018 1,500 Rent expense Prepaid rent 1,500 ces 4 Dec 31, 2018 1,300 Supplies expense (Office) Supplies (Office) 1,300 5 Dec 31, 2018 2,400 Interest expense Accounts payable 2,400 6 Dec 31, 2018 2,900 Supplies expense (Racing) Supplies (Racing) 2,900 7 Dec 31, 2018 13,700 Income tax expense Income tax payable 13,700 3. Post transactions from August 1 through December 31 and adjusting entries on December 31 to T-accounts. (Be sure to include beginning balances in the T-accounts.) Cash Prepaid Insurance Beg Bal Beg. Bal. Aug. 1 (Aug. 4 Aug. 10 Aug. 17 Aug. 24 End. Bal 2.220 End. Bal 0 Prepaid Rent Supplies (Office) Beg. Bal Beg Bal 0 End. Bal. 0 End. Bal. Supplies (Racing) Equipment (Bikes) Bog. Bal Beg Bal 0 End. Bal 0 End. Bal Equipment (Kayaks) Accumulated Depreciation gu 913 Navi Required information Accumulated Depreciation Equipment (Kayaks) Beg. Bal. Beg Bal. 0 End. Bal End. Bal. 0 Deferred Revenue Accounts Payable Beg. Bal Beg Bal End. Bal 0 End. Bal. Income Tax Payable Interest Payable Beg Bal. Beg Bal ces End. Bal. 0 End. Bal Common Stock Notes Payable Beg. Bal Beg Bal 0 End. Bal. 0 End. Bal. Dividends Service Revenue (Clinic) Beg. Bat. Beg. Bal Prey Su 00 of 9 Next > Required information Dividends Service Revenue (Clinic) 18 Beg. Bal Beg. Bat. End. Bal. 0 End. Bal 0 Service Revenue (Racing) Advertising Expense Beg. Bal. Beg. Bal. 0 End. Bal. End. Bal. ces Legal Fees Expense Miscellaneous Expense Beg Bal Beg Bal End. Bal. 0 End. Bal. Salaries Expense Depreciation Expense Beg Bal Beg Bal End. Bal. End. Bal 0 BBB 4. 4. Prepare an adjusted trial balance as of December 31, 2018. (The items in the Trial Balance should be grouped as follows: Assets, Contra-asset accounts, Liabilities, Equity, Dividends, Revenues, and expenses.) Part 4 of 8 2.22 points Credit eBook GREAT ADVENTURES, Inc. Adjusted Trial Balance December 31, 2018 Accounts Debit Cash $ 27,860 Prepaid insurance 4,080 Prepaid rent Supplies (Office) 1,300 Equipment (Bikes) 19,600 Insurance expense Rent expense Supplies expense (Racing) Interest expense 910 Income tax expense 1,500 Print 1,300 40,000 5,550 References