Great Adventures Problem 3-1

[The following information applies to the questions displayed below.] 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. Aug. 1 Great Adventures obtains a $31,000 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 $12,000 cash. Aug. 10 Twenty additional kayakers pay $3,400 ($170 each), in addition to the $6,000 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 $12,400 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, purchasing a one-year rental policy for $3,480 ($290 per month). Sep. 21 Tony conducts a rock-climbing clinic. The company receives $13,300 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 $18,600 cash. Dec. 1 Tony decides to hold the companys 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 $680. Dec. 5 To help organize and promote the race, Tony hires his college roommate, Victor. Victor will be paid $70 in salary for each team that competes in the race. His salary will be paid after the race. Dec. 8 The company pays $1,700 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 $2,600 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 $27,200 cash from a total of forty teams, and the race is held. Dec. 16 The company pays Victors salary of $2,800. 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 $4,800. 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, 2018. a. Depreciation of the mountain bikes purchased on July 8 and kayaks purchased on August 4 totals $8,300. b. Six months worth of insurance has expired. c. Four months worth of rent has expired. d. Of the $1,600 of office supplies purchased on July 4, $400 remains. e. Interest expense on the $31,000 loan obtained from the city council on August 1 should be recorded. f. Of the $2,600 of racing supplies purchased on December 12, $170 remains. g. Suzie calculates that the company owes $13,500 in income taxes. Assume the following ending balances for the month of July.

	Balance
Cash	$	15,590
Prepaid insurance		4,920
Supplies (Office)		1,600
Equipment (Bikes)		10,800
Accounts payable		1,600
Deferred revenue		6,000
Common stock		22,000
Service revenue (Clinic)		6,050
Advertising expense		1,240
Legal fees expense		1,500

5-b. For the period July 1 to December 31, 2018, prepare a statement of stockholders equity. All account balances on July 1 were zero.

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