Tony and Suzie graduate from college in May 2018 and begin developing their new

business. They begin by offering clinics for basic outdoor activities such as mountain

biking or kayaking. Upon developing a customer base, they'll hold their first adventure

races. These races will involve four-person teams that race from one checkpoint to the

next using a combination of kayaking, mountain biking, orienteering, and trail running. In

the long run, they plan to sell outdoor gear and develop a ropes course for outdoor

enthusiasts.

On July 1, 2018, Tony and Suzie organize their new company as a corporation, Great

Adventures Inc. The articles of incorporation state that the corporation will sell 20,000

shares of common stock for $1 each. Each share of stock represents a unit of

ownership. Tony and Suzie will act as co-presidents of the company. The following

business activities occur during July for Great Adventures.

July 1

Sell $10,000 of common stock to Suzie.

1 Sell $10,000 of common stock to Tony.

1 Purchase a one-year insurance policy for $4,800 ($400

per month) to cover injuries to participants during

outdoor clinics.

2 Pay legal fees of $1,500 associated with incorporation.

4 Purchase office supplies of $1,800 on account.

7 Pay for advertising of $300 to a local newspaper for an

upcoming mountain biking clinic to be held on July 15.

Attendees will be charged $50 the day of the clinic.

8

Purchase 10 mountain bikes, paying $12,000 cash.

15

On the day of the clinic, Great Adventures receives

cash of $2,000 from 40 bikers. Tony conducts the

mountain biking clinic.

22

Because of the success of the first mountain biking

clinic, Tony holds another mountain biking clinic and

the company receives $2,300.

24

Pay for advertising of $700 to a local radio station for a

kayaking clinic to be held on August 10. Attendees can

pay $100 in advance or $150 on the day of the clinic.

30

Great Adventures receives cash of $4,000 in advance

from 40 kayakers for the upcoming kayak clinic.

BBUS 210 Project 1

Aug. 1

Great Adventures obtains a $30,000 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 $28,000

cash.

Aug. 10

Twenty additional kayakers pay $3,000 ($150 each),

in addition to the $4,000 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 $10,500 cash.

Aug. 24

Office supplies of $1,800 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

$2,400 ($200 per month).

Sep. 21

Tony conducts a rock-climbing clinic. The company

receives $13,200 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 $17,900 cash.

Dec. 1

Tony decides to hold the company's 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 $500.

Dec. 5

To help organize and promote the race, Tony hires

his college roommate, Victor. Victor will be paid $50

in salary for each team that competes in the race.

His salary will be paid after the race.

BBUS 210 Project 1

Dec. 8

The company pays $1,200 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 $2,800

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 $20,000 cash from a total of

forty teams, and the race is held.

Dec. 16

The company pays Victor's salary of $2,000.

Dec. 31

The company pays a dividend of $4,000 ($2,000 to

Tony and $2,000 to Suzie).

Dec. 31

Using his personal money, Tony purchases a

diamond ring for $4,500. Tony surprises Suzie by

proposing that they get married. Suzie accepts and

they get married!

Required:

1.Record each transaction in July for Great Adventures.

2.Post each transaction to T-accounts.

3.Prepare a trial balance.

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 $8,000.

b.Six months' of the one-year insurance policy purchased on July 1 has expired.

c.Four months' of the one-year rental policy purchased on September 1 has expired.

d.Of the $1,800 of office supplies purchased on July 4, $300 remains.

e.Interest expense on the $30,000 loan obtained from the city council on August 1

should be recorded.

f.Of the $2,800 of racing supplies purchased on December 12, $200 remains.

g.Suzie calculates that the company owes $14,000 in income taxes.

BBUS 210 Project 1

Required:

1.Record adjusting entries as of December 31, 2018.

2.Post transactions from July 1 through December 31 and adjusting entries on

December 31 to T-accounts.

3.Prepare an adjusted trial balance as of December 31, 2018.

4.For the period July 1 to December 31, 2018, prepare an income statement and

statement of stockholders' equity. Prepare a classified balance sheet as of

December 31, 2018.

5.Record closing entries as of December 31, 2018.

6.Post closing entries to T-accounts.

7.Prepare a post-closing trial balance as of December 31, 2018.