RWP$7-1($Static$)$ Great Adventures Continuing Case

$[$The following information applies to the questions displayed below.$]$

Tony and Suzie see the need for a rugged all$-$terrain vehicle to transport participants and supplies. They decide to purchase a used Suburban on July $1,2025,$ for $$12,000.$ They expect to use the Suburban for five years and then sell the vehicle for $$4,500.$ The following expenditures related to the vehicle were also made on July $1,2025$ :

The company pays $$1,800$ to GEICO for a one$-$year insurance policy.

The company spends an extra $$3,000$ to repaint the vehicle, placing the Great Adventures logo on the front hood, back, and both sides.

An additional $$2,000$ is spent on a deluxe roof rack and a trailer hitch.

The painting, roof rack, and hitch are all expected to increase the future benefits of the vehicle for Great Adventures. In addition, on October $22,2025,$ the company pays $$400$ for basic vehicle maintenance related to changing the oil, replacing the windshield wipers, rotating the tires, and inserting a new air filter.

RWP$8-1($Static$)$ Great Adventures Continuing Case Part $2$

$2.$ If the likelihood of payment for the litigation is determined to be reasonably possible, what should Great Adventures record for this possible payment. $($If no entry is required for a transaction$/$event$,$ select $"$No Journal Entry Required" in the first account field.$)$

Journal entry worksheet

Additional interest for five months needs to be accrued on the $$30,0006\%$ note payable obtained on Augus $1,2024.$ Recall that annual interest is paid each July $31.$ Record the adjusting entry.

Assume that $$10,000$ of the $$30,000$ note discussed above is due next year. Record the entry to reclassify the current portion of the long$-$term note.

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

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 $$12,000.$ Record the adjusting entry.

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 $$4,000.$ Record the adjusting entry.

$1$

Record the possible payment for a litigation whose likelihood of payment is

determined to be reasonably possible.