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 30,000 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. Jul. 1 Sell $15,000 of common stock to Suzie. Jul. 1 Sell $15,000 of common stock to Tony. Jul. 1 Purchase a one-year insurance policy for $4,560 ($380 per month) to cover injuries to participants during outdoor clinics. Jul. 2 Pay legal fees of $1,100 associated with incorporation. Jul. 4 Purchase office supplies of $1,600 on account. Jul. 7 Pay for advertising of $290 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. Jul. 8 Purchase 10 mountain bikes, paying $11,900 cash. Jul. 15 On the day of the clinic, Great Adventures receives cash of $4,000 from 80 bikers. Tony conducts the mountain biking clinic. Jul. 22 Because of the success of the first mountain biking clinic, Tony holds another mountain biking clinic and the company receives $4,550. Jul. 24 Pay for advertising of $690 to a local radio station for a kayaking clinic to be held on August 10. Attendees can pay $150 in advance or $200 on the day of the clinic Jul. 30 Great Adventures receives cash of $10,500 in advance from 70 kayakers for the upcoming kayak clinic. Journal entry worksheet 4 6 7 Sell $15,000 of common stock to Suzie. Note: Enter debits before credits. Credit Debit Date General Journal July 01, 2018 Record entry Clear entry View general journal 2. Post each transaction to the appropriate T-accounts and calculate the ending balance of each account. Cash Prepaid Insurance End. bal. End. bal Supplies Equipment End. bal. End. bal. Accounts Payable Deferred Revenue End. bal. End. bal. Common Stock Service Revenue End. bal. End. bal Advertising Expense Legal Fees Expense End. bal End. bal. 3. Prepare a trial balance. (The items in the Trial Balance should be grouped as follows: Assets, Liabilities, Stockholders' Equity, Revenue and Expenses.) GREAT ADVENTURES, INC. Trial Balance July 31, 2018 Accounts Debit Credit ash Prepaid insurance Equipment Accounts payable eferred revenue stock Service revenue Advertising expense Legal fees expense Totals
