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 $860 each.

July 17	Purchased 104 watches for $15,600 ($150 per watch) on account.
July 31	Sold 76 watches for $65,360 cash.
August 12	Purchased 76 watches for $12,160 ($160 per watch) cash.
August 22	Sold 66 watches for $56,760 on account.
September 19	Paid for watches purchased on July 17.
September 27	Receive cash of $34,056 for watches sold on account on August 22.
October 27	Purchased 170 watches for $27,540 ($162 per watch) cash.
November 20	Sold 146 watches for $125,560 cash.
December 4	Purchased 136 watches for $23,392 ($172 per watch) on account.
December 8	Sold 76 watches for $65,360 on account.

Great Adventures, Incorporated
Trial Balance
December 31, 2025
Accounts	Debit	Credit
Cash	$ 37,310
Accounts Receivable	42,000
Allowance for Uncollectible Accounts		$ 4,200
Inventory	0
Equipment	63,000
Accumulated Depreciation		33,000
Accounts Payable		6,400
Interest Payable		1,650
Income Tax Payable		16,300
Notes Payable (Long-term)		66,000
Common Stock		27,830
Retained Earnings		37,950
Service Revenue		53,500
Sales Revenue		0
Interest Revenue		210
Sales Discounts	530
Cost of Goods Sold	0
Depreciation Expense	25,000
Insurance Expense	6,600
Rent Expense	4,200
Salaries Expense	42,000
Supplies Expense	2,300
Bad Debt Expense	4,200
Interest Expense	3,600
Income Tax Expense	16,300
Totals	$ 247,040	$ 247,040

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.

Purchased 104 watches for $15,600 ($150 per watch) on account. Record the purchase of inventory on account.

Sold 76 watches for $65,360 cash. Record the sale of inventory for cash.

Sold 76 watches for $65,360 cash. Record the cost of inventory sold.

Purchased 76 watches for $12,160 ($160 per watch) cash. Record the purchase of inventory for cash.

Sold 66 watches for $56,760 on account. Record the sale.

Sold 66 watches for $56,760 on account. Record the cost of the sale.

Paid for watches purchased on July 17. Record the payment of cash.

Receive cash of $34,056 for watches sold on account on August 22. Record the receipt of cash for the sale.

Purchased 170 watches for $27,540 ($162 per watch) cash. Record the purchase of inventory for cash.

Sold 146 watches for $125,560 cash. Record the sale of inventory for cash.

Sold 146 watches for $125,560 cash. Record the cost of inventory sold.

Purchased 136 watches for $23,392 ($172 per watch) on account. Record the purchase of inventory on account.

Sold 76 watches for $65,360 on account. Record the sale of inventory on account.

Sold 76 watches for $65,360 on account. Record the cost of inventory sold.

Record any necessary adjusting entry for lower of cost and net realizable value.

Record the closing entry for revenue accounts.

Record the closing entry for expense accounts.