At the end of 2022, the following information is available for Great Adventures.

• Additional interest for five months needs to be accrued on the $30,400, 6% loan obtained on August 1, 2021. Recall that annual interest is paid each July 31.
• Assume that $10,400 of the $30,400 loan discussed above is due next year.
• By the end of the year, $20,000 in gift cards have been redeemed. The company had sold gift cards of $25,400 during the year and recorded those as Deferred Revenue.
• Great Adventures is a defendant in litigation involving a biking accident during one of its adventure races. The company believes the likelihood of payment occurring is probable, and the estimated amount to be paid is $12,400.
• For sales of MU watches, Great Adventures offers a warranty against defect for one year. At the end of the year, the company estimates future warranty costs to be $4,400

Part1: Prepare the journal entries for transactions.

1. Additional interest for five months needs to be accrued on the $30,400, 6% loan obtained on August 1, 2021. Recall that annual interest is paid each July 31.

2. Assume that $10,400 of the $30,400 loan discussed above is due next year.

3. By the end of the year, $20,000 in gift cards have been redeemed. The company had sold gift cards of $25,400 during the year and recorded those as Deferred Revenue.

4. Great Adventures is a defendant in litigation involving a biking accident during one of its adventure races. The company believes the likelihood of payment occurring is probable, and the estimated amount to be paid is $12,400.

5. For sales of MU watches, Great Adventures offers a warranty against defect for one year. At the end of the year, the company estimates future warranty costs to be $4,400.

6. Record the closing entry for revenue accounts.

7. Record the closing entry for expense and loss accounts.

Part 2: Prepare an income statement for the period ended December 31, 2022.

Part 3: Prepare a classified balance sheet as of December 31, 2022.