Tony and Suzie graduate from college in May 2021 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, 2021, Tony and Suzie organize their new company as a corporation, Great Adventures Inc. The articles of incorporation state that the corporation will sell 36,000 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 transactions occur from July 1 through December 31. Jul. 1 Sell $18,000 of common stock to Suzie. Jul. Jul. 1 Sell $18,000 of common stock to Tony. 1 Purchase a one-year insurance policy for $5,640 ($470 per month) to cover injuries to participants during outdoor clinics. Jul. 2 Pay legal fees of $1,900 associated with incorporation. Jul. Jul. Jul. 4 Purchase office supplies of $1,700 on account. 7 Pay for advertising of $320 to a local newspaper for an upcoming mountain biking clinic to be held on July 15. Attendees will be charged $40 on the day of the clinic. 8 Purchase 10 mountain bikes, paying $13,600 cash. Jul. 15 On the day of the clinic, Great Adventures receives cash of $2,400 from 60 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 $2,900. Jul. 24 Pay $870 to a local radio station for advertising to appear immediately. A kayaking clinic will be held on August 10, and attendees can pay $110 in advance or $160 on the day of the clinic. Jul. 30 Great Adventures receives cash of $6,600 in advance from 60 kayakers for the upcoming kayak clinic. Aug. 1 Great Adventures obtains a $32,000 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 $23,800 cash. Aug. 10 Twenty additional kayakers pay $3,200 ($160 each), in addition to the $6,600 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 $11,700 cash. Aug. 24 Office supplies of $1,700 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 for one year, paying $3,240 ($270 per month) in advance. Sep. 21 Tony conducts a rock-climbing clinic. The company receives $14,500 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 $18,800 cash. Dec. Dec. 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 $530. 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. 8 The company pays $2,000 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 $2,200 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 $21,200 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 $3,600 ($1,800 to Tony and $1,800 to Suzie). Dec. 31 Using his personal money, Tony purchases a diamond ring for $4,400. Tony surprises Suzie by proposing that they get married. Suzie accepts and they get married! The following information relates to year-end adjusting entries as of December 31, 2021. a. Depreciation of the mountain bikes purchased on July 8 and kayaks purchased on August 4 totals $8,400. b. Six months' of the one-year insurance policy purchased on July 1 has expired. c. Four months of the one-year rental agreement purchased on September 1 has expired. d. Of the $1,700 of office supplies purchased on July 4. $380 remains. e. Interest expense on the $32,000 loan obtained from the city council on August 1 should be recorded. f. Of the $2,200 of racing supplies purchased on December 12, $120 remains. g. Suzie calculates that the company owes $14,500 in income taxes. No Date 1 Jul 01, 2021 Cash Common Stock 2 Jul 01, 2021 Cash Common Stock 3 Jul 01, 2021 Prepaid Insurance Cash 4 Jul 02, 2021 Legal Fees Expense Cash 5 Jul 04, 2021 Supplies (Office) Accounts Payable 6 Jul 07, 2021 Advertising Expense Cash 7 Jul 08, 2021 Equipment (Bikes) Cash General Journal Debit Credit 18,000 18,000 >> C 18,000 18,000 5,640 5,640 1,900 1,900 1,700 1,700 320 320 13,600 13,600 8 Jul 15, 2021 Cash Service Revenue (Clinic) 2,400 2,400 9 Jul 22, 2021 Cash 2,900 Service Revenue (Clinic) 2,900 10 Jul 24, 2021 Advertising Expense Cash 870 870 F 11 Jul 30, 2021 Cash Deferred Revenue 12 Aug 01, 2021 Cash Notes Payable 6,600 6,600 32,000 32,000 13 Aug 04, 2021 Equipment (Kayaks) 23,800 Cash 23,800 14 14 Aug 10, 2021 Cash Deferred Revenue Service Revenue (Clinic) 3,200 6,600 9,800 15 Aug 17, 2021 Cash 11,700 Service Revenue (Clinic) 11,700 16 Aug 24, 2021 Accounts Payable Cash 1,700 1,700 17 75 Sep 01, 2021 Prepaid Rent Cash 3,240 3,240 18 Sep 21, 2021 Cash 14,500 Service Revenue (Clinic) 14,500 19 Oct 17, 2021 Cash 18,800 Service Revenue (Clinic) 18,800 20 Dec 01, 2021 No Journal Entry Required 21 Dec 05, 2021 No Journal Entry Required 22 Dec 08, 2021 Miscellaneous Expense Cash 2,000 2,000 23 Dec 12, 2021 Supplies (Racing) Accounts Payable 2,200 2,200 24 24 Dec 15, 2021 Cash 21,200 Service Revenue (Racing). 21,200 25 Dec 16, 2021 Salaries Expense Cash 2,000 2,000 26 Dec 31, 2021 Dividends Cash 27 Dec 31, 2021 No Journal Entry Required 3,600 3,600 C 3. Post transactions from July 1 through December 31 and adjusting entries on December 31 to T-accounts. Beg. Bal. End. Bal. Cash Beg. Bal. Prepaid Insurance End. Bal. 0 Prepaid Rent Beg. Bal. Supplies (Office) Beg. Bal. End. Bal. End. Bal. 0 Supplies (Racing) Beg. Bal. Beg. Bal. Equipment (Bikes) End. Bal. End. Bal. 0 Equipment (Kayaks) Beg. Bal. Accumulated Depreciation Beg. Bal. End. Bal. 0 End. Bal. 0 Accounts Payable Deferred Revenue Beg. Bal. Beg. Bal. End, Bal. End. Bal. 0 Interest Payable Income Tax Payable Beg. Bal. Beg. Bal. End. Bal. End. Bal. 0 Notes Payable Common Stock Beg. Bal. Beg. Bal.. End. Bal. 0 End. Bal. Dividends Beg. Bal. Service Revenue (Clinic) Beg. Bal. End. Bal. 0 End. Bal. Service Revenue (Racing) Advertising Expense Beg. Bal. Beg. Bal. End. Bal. End. Bal. 0 Legal Fees Expense Miscellaneous Expense Beg. Bal. Beg. Bal. End. Bal. End. Bal. Salaries Expense Depreciation Expense Beg. Bal. Beg. Bal. End. Bal. End. Bal Insurance Expense Rent Expense Beg. Bal. Beg. Bal. End. Bal. 0 End. Bal. 0 Supplies Expense (Office) Supplies Expense (Racing) Beg. Bal. Beg. Bal. End. Bal. End. Bal. Interest Expense Income Tax Expense Beg. Bal. Beg. Bal. End. Bal. 0 End. Bal. 0