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 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 transactions occur from July 1 through December 31 Jul. 1 Sell sie,eee of common stock to Suzie. Jul 1 Sell $10,ece of common stock to Tony. Jul. 1 Purchase a one-year insurance policy for $4,890 (5422 per month) to cover injuries to participants during outdoor clinics Jul 2 Pay legal fees of $1,509 associated with incorporation Jul. 4 Purchase office supplies of $1,see on account. Jul 7 Pay for advertising of $388 to a local newspaper for an upcoming mountain biking clinic to be held on July 15. Attendees will be charged $50 on the day of the clinic. Jul. 8 Purchase 18 mountain bikes, paying $12,00 cash. Jul. 15 On the day of the clinic, Great Adventures receives cash of $2,eee from 48 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 $2,388. Jul 24 Pay $700 to a local radio station for advertising to appear immediately. A kayaking clinic will be held on August 18, and attendees can pay $lee in advance or $158 on the day of the clinic. Jul. 3 Great Adventures receives cash of $4.ee in advance from 4e kayakers for the upcoming kayak clinic. Aug. 1 Great Adventures obtain a $30,00e low-interest loan for the company from the city council, which has recently passed an initiative encouraging business developrent related to outdoor activities. The loan is due in three years, and 6% annual interest is due cach year on July 31. Aug. The company purchases 14 kayaks, paying $28,698 cash. Aug. 10 Twenty additional kayakers pay $3,eee ($150 each), in addition to the $4,000 that was paid in advance on July 38, on the day of the clinic. Tony conducts the first kayak clinic. Aug. 17 Tony conducts & Second kayak clinic, and the company receives $18,568 cash. Aug. 24 Office supplies of $1,800 purchased on July 4 are paid in full 1 To provide better storage of mountain bikes and kayaks when not in use, the company rents a storage shed for one year, paying $2,400 ($200 per month) in advance. Sep. 21 Tony conducts a rock-climbing clinic. The company receives $13, 2ee cash. Oct. 17 Tony conducts an orienteering clinic. Participants practice how to understand a topographical nap, read an altimeter, use compass, and orient through heavily wooded areas. The company receives $17,988 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 roomate, Victor. Victor will be paid $se in salary for each team that corpetes in the race. His salary will be paid after the race. Dec. 3 The company pays $1,200 to purchase a pornit 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 $2,808 an account due in 3 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 $2a,eee cash from a total of Forty teams, and the race is held. Dec. 15 The company pays Victor's salary of $2,000. Dec. 31 The company pays a dividend of $4,80 ($2,000 to Tony and $2,000 to Suzie). Dec. 31 using his personal money, Tony purchases a dirond ring for $4,560. 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 $8,000. 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 $1,800 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 . Of the $2,800 of racing supplies purchased on December 12, $200 remains. 9. Suzie calculates that the company owes $14,000 in income taxes. 3. Post transactions from July 1 through December 31 and adjusting entries on December 31 to T-accounts Cash Prepaid Insurance Beg Bal Jul 1 4,800 Beg Bal Jul. 1 Jul 1 Jul 15 Jul 22 Jul 30 Aug 1 Aug. 10 Aug 17 Sep 21 Oct. 17 Dec. 15 10,000 10,000 2.000 2.300 4,000 30,000 3.000 10.500 13,200 17.900 20000 End. Bal 4.800 End, Bal 122.900 Prepaid Rent Supplies (Office) Beg. Bal. Sep. 1 Beg. Bal dul 4 2.400 1,800 End, Bal. 2400 End. Bal 1,800 Supplies (Racing! Equipment (Bikes) Bog Bal Bag Bal Dec. 12 2,800 ul. 8 12.000 End. Bal 2.800 End. Bal 12,000 Equipment (Kayaks) Accumulated Depreciation Beg Bal Beg Bal Aug 4 28.000 End, Bal 28.000 End Bal 0 Accounts Payable Deferred Revenue Beg Bail Beg. Bal. Aug 24 1,800 End. Bal. 1,800 End. Bal 0 Interest Payable Income Tax Payable Beg. Bal Beg. Bal. End, Bal 0 End Bal 0 Notes Payable Common Stock Beg. Bal Beg. Bal End, Bal 0 End Bal 0 Dividends Service Revenue (Clinic) Beg. Bal Beg. Bal. Dec 31 4,000 End. Bal 4,000 End. Bal 0 Service Revenue (Racing) Advertising Expense Beg. Bal Dec. 15 20,000 Beg. Bal. Jul 7 Jul. 24 End. Bal 300 700 1,000 End. Bal 20,000 Legal Fees Expense Miscellaneous Expense Beg. Bal Jul. 2 Beg. Bal. Dec 8 1,500 1,200 End. Bal 1,500 End. Bal 1,200 Salaries Expense Depreciation Expense Beg. Bei Beg. Bal. Dec. 31 Dec. 16 2,000 8,000 End, Bal 2,000 End. Bal 8,000 Insurance Expense Rent Expense Beg. Bal Dec. 31 Beg. Bal Dec. 31 2,400 800 End. Ball 2.400 End. Bal 800 Supplies Expense (Office) Supplies Expense (Racing) Beg Bal. Dec 31 Bog. Bal Dec. 31 1,500 2,600 End. Bal 1,500 End, Bal 2,600 Interest Expense Income Tax Expense Bag. Bal. Dec 31 Beg. Bal Dec 31 750 14,000 End. Bal. 750 End. Bal. 14,000