Now that operations for outdoor clinics and TEAM events are running smoothly, Suzie thinks of another area for business expansion. She notices that a few clinic participants wear multiuse (MU) watches. Beyond the normal timekeeping features of most watches, MU watches are able to report temperature, altitude, and barometric pressure. MU watches are waterproof, so moisture from kayaking, rain, fishing, or even diving up to 100 feet wont damage them. Suzie decides to have MU watches available for sale at the start of each clinic. The following transactions relate to purchases and sales of watches during the second half of 2025. All watches are sold for $500 each.

July 17	Purchased 50 watches for $7,500 ($150 per watch) on account.
July 31	Sold 40 watches for $20,000 cash.
August 12	Purchased 40 watches for $6,400 ($160 per watch) cash.
August 22	Sold 30 watches for $15,000 on account.
September 19	Paid for watches purchased on July 17.
September 27	Receive cash of $9,000 for watches sold on account on August 22.
October 27	Purchased 80 watches for $13,600 ($170 per watch) cash.
November 20	Sold 90 watches for $45,000 cash.
December 4	Purchased 100 watches for $18,000 ($180 per watch) on account.
December 8	Sold 40 watches for $20,000 on account.

Great Adventures, Incorporated
Trial Balance
December 31, 2025
Accounts	Debit	Credit
Cash	$ 36,770
Accounts Receivable	24,000
Allowance for Uncollectible Accounts		$ 2,400
Inventory	0
Equipment	45,000
Accumulated Depreciation		24,000
Accounts Payable		2,800
Interest Payable		750
Income Tax Payable		14,500
Notes Payable (Long-term)		30,000
Common Stock		20,000
Retained Earnings		33,450
Service Revenue		44,500
Sales Revenue		0
Interest Revenue		120
Sales Discounts	350
Cost of Goods Sold	0
Depreciation Expense	16,000
Insurance Expense	4,800
Rent Expense	2,400
Salaries Expense	24,000
Supplies Expense	500
Bad Debt Expense	2,400
Interest Expense	1,800
Income Tax Expense	14,500
Totals	$ 172,520	$ 172,520

Late in December, the next generation of multiuse (MU II) watches is released. In addition to all of the features of the MU watch, the MU II watches are equipped with a global positioning system (GPS) and have the ability to download and play songs and videos off the Internet. The demand for the original MU watches is greatly reduced. As of December 31, the estimated net realizable value of MU watches is only $100 per watch.

1. Record each of the transactions listed above in the 'General Journal' tab (these are shown as items 1 to 14). Review the 'General Ledger' and the 'Trial Balance' tabs to see the effect of the transactions on the account balances.
2. Record adjusting entries on December 31, 2025, in the 'General Journal' tab.
3. Review the adjusted 'Trial Balance' as of December 31, 2025.
4. Prepare an income statement for the period ended December 31, 2025, in the 'Income Statement' tab.
5. Prepare a classified balance sheet as of December 31, 2025 in the 'Balance Sheet' tab.