7 10 points 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 29,000 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. Jul. 1 Sell $14,500 of common stock to Suzie. Jul. Jul. Jul. Jul. Jul. Jul. 1 Sell $14,500 of common stock to Tony. 1 Purchase a one-year insurance policy for $5,520 ($460 per month) to cover injuries to participants during outdoor clinics. 2 Pay legal fees of $1,100 associated with incorporation. 4 Purchase office supplies of $1,600 on account. 7 Pay for advertising of $300 to a local newspaper for an upcoming mountain biking clinic to be held on July 15. Attendees will be charged $70 on the day of the clinic. 8 Purchase 10 mountain bikes, paying $17,200 cash. Jul. 15 On the day of the clinic, Great Adventures receives cash of $4,200 from 60 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 $4,750. Jul. 24 Pay $850 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 $8,400 in advance from 70 kayakers for the upcoming kayak clinic. Aug. Aug. 1 Great Adventures obtains a $38,000 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. 4 The company purchases 14 kayaks, paying $20,800 cash. Aug. 10 Twenty additional kayakers pay $3,400 ($170 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 $10,900 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 $3,120 ($260 per month) in advance. Sep. 21 Tony conducts a rock-climbing clinic. The company receives $13,900 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 $19,600 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 Return to question 7 10 points Dec. Sep. 21 Tony conducts a rock-climbing clinic. The company receives $13,900 cash. Dec. 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 $19,600 cash. 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 $510. 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. 8 The company pays $1,400 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 $3,000 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 $20,400 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 $4,900 ($2,450 to Tony and $2,450 to Suzie). Dec. 31 Using his personal money, Tony purchases a diamond ring for $4,200. 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. 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 $1,600 of office supplies purchased on July 4, $330 remains. e. Interest expense on the $38,000 loan obtained from the city council on August 1 should be recorded. f. Of the $3,000 of racing supplies purchased on December 12, $270 remains. g. Suzie calculates that the company owes $14,000 in income taxes. Answer is not complete. Return to question 14 Aug 10, 2021 Cash 3,400 Service Revenue (Clinic) 3,400 Deferred Revenue 8,400 Service Revenue (Clinic) 8,400 15 Aug 17, 2021 Cash Service Revenue (Clinic) 10,900 10,900 20 Dec 01, 2021 Legal Fees Expense Cash 2,040 2,040 x 21 Dec 05, 2021 Salaries Expense Accounts Payable 22 22 Dec 08, 2021 Miscellaneous Expense Cash 23 23 Dec 12, 2021 Supplies (Racing) Accounts Payable 200 X 200 1,400 1,400 3,000 3,000 36 Dec 31, 2021 Supplies Expense (Office) Supplies Expense (Racing) Salaries Expense Miscellaneous Expense Interest Payable Legal Fees Expense Insurance Expense Advertising Expense Depreciation Expense Rent Expense Income Tax Expense 37 Dec 31, 2021 Retained Earnings < Requirement General Ledger > 4,900 4,900 Requirement Answer is not complete. General Journal General Ledger Trial Balance Income Statement Statement of SE Balance Sheet Using the dropdown buttons, select the item that accurately describes the values that either increase or decrease the balance indicated. Post-closing GREAT ADVENTURES, Inc. Statement of Stockholders' Equity For the year ended December 31, 2021 Common Stock Retained Earnings Total Stockholders' Equity Balance at July 1 Add: Issuance of Common Stock Add: Net Income for 2021 29,000 29,000 47,310 47,310 Less: Dividends (4,900) (4,900) Balance at December 31 $ 29,000 $ 42,410 $ 71,410 < Income Statement Balance Sheet > Answer is not complete. General Requirement Journal General Ledger Trial Balance Income Statement Statement of SE Balance Sheet The balance sheet is the accounting equation: Assets Liabilities + Equity. Each asset and liability account is reported separately on the balance sheet. Post-closing Assets Current Assets: Prepaid Insurance Prepaid Rent Supplies (Office) Supplies (Racing) Total Current Assets Long-term assets: Equipment (Bikes) Equipment (Kayaks) Accumulated Depreciation Total Assets GREAT ADVENTURES, Inc. Balance Sheet December 31, 2021 49444 0000 Liabilities Current Liabilities: 2,760 Accounts Payable 2,080 Income Taxes Payable 330 Interest Payable 270 494 4 3,200 14,000 950 Total Current Liabilities 18,150 Notes Payable 38,000 5,440 Total Liabilities 56,150 Stockholders' Equity 17,200 Common Stock 29,000 20,800 Retained Earnings 37,510 (7,600) 0 Total Stockholders' Equity 66,510 $ 35,840 Total Liabilities and Stockholders' Equity $ 122,660 < Statement of SE Balance Sheet >