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, theyll 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 26,000 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 $13,000 of common stock to Suzie Jul 1 Sell $13,000 of common stock to Tony Jul 1 Purchase a one year insurance policy for $4,680 ($390 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 $1,700 on account Jul 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 Jul 8 Purchase 10 mountain bikes, paying $13,900 cash Jul 15 On the day of the clinic, Great Adventures receives cash of $1,600 from 40 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 $2,050 Jul 24 Pay $850 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 $39,000 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 $22,800 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 $12,100 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 $4,320 ($360 per month) in advance Sep 21 Tony conducts a rock climbing clinic The company receives $13,400 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 $18,100 cash Dec 1 Tony decides to hold the companys 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 $540 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 Dec 8 The company pays $1,400 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 $2,400 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 $21,600 cash from a total of forty teams, and the race is held Dec 16 The company pays Victors salary of $2,000 Dec 31 The company pays a dividend of $4,900 ($2,450 to Tony and $2,450 to Suzie) Dec 31 Using his personal money, Tony purchases a diamond ring for $5,400 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 Depreciation of the mountain bikes purchased on July 8 and kayaks purchased on August 4 totals $7,300 Six months of the one year insurance policy purchased on July 1 has expired Four months of the one year rental agreement purchased on September 1 has expired Of the $1,700 of office supplies purchased on July 4, $350 remains Interest expense on the $39,000 loan obtained from the city council on August 1 should be recorded Of the $2,400 of racing supplies purchased on December 12, $160 remains Suzie calculates that the company owes $13,800 in income taxes 3 Post transactions from July 1 through December 31 and adjusting entries on December 31 to T accounts Cash Prepaid Insurance 15,400 Beg Bal Jul 1 Dec 31 Beg Bal Aug 1 Aug 10 Aug 17 Sep 21 Aug 4 Aug 24 Sep 1 End Bal 0 Dec 8 Oct 17 Dec 16 Dec 15 Dec 31 End Bal 15,400 Prepaid Rent Supplies (Office) Beg Bal Beg Bal End Bal 0 End Bal 0 Supplies (Racing) Equipment (Bikes) Beg Bal Beg Bal End Bal 0 End Bal 0 Equipment (Kayaks) Accumulated Depreciation Beg Bal 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 0 End Bal 0 Notes Payable Common Stock Beg Bal Beg Bal 26,000 Jul 1 Jul 1 End Bal 0 End Bal 26,000 Dividends Service Revenue (Clinic) 3,650 Beg Bal Beg Bal End Bal 0 End Bal 3,650 Service Revenue (Racing) Advertising Expense Beg Bal Beg Bal End Bal 0 End Bal 0 Legal Fees Expense Miscellaneous Expense Beg Bal Beg Bal End Bal 0 End Bal 0 Salaries Expense Depreciation Expense Beg Bal Beg Bal End Bal 0 End Bal 0 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 0 End Bal Interest Expense Income Tax Expense Beg Bal Beg Bal End Bal 0 End Bal 0

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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

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, theyll 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 26,000 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 $13,000 of common stock to Suzie.
Jul.	1	Sell $13,000 of common stock to Tony.
Jul.	1	Purchase a one-year insurance policy for $4,680 ($390 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 $1,700 on account.
Jul.	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.
Jul.	8	Purchase 10 mountain bikes, paying $13,900 cash.
Jul.	15	On the day of the clinic, Great Adventures receives cash of $1,600 from 40 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 $2,050.
Jul.	24	Pay $850 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 $39,000 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 $22,800 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 $12,100 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 $4,320 ($360 per month) in advance.
Sep.	21	Tony conducts a rock-climbing clinic. The company receives $13,400 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 $18,100 cash.
Dec.	1	Tony decides to hold the companys 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 $540.
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.
Dec.	8	The company pays $1,400 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 $2,400 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 $21,600 cash from a total of forty teams, and the race is held.
Dec.	16	The company pays Victors salary of $2,000.
Dec.	31	The company pays a dividend of $4,900 ($2,450 to Tony and $2,450 to Suzie).
Dec.	31	Using his personal money, Tony purchases a diamond ring for $5,400. 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.

Depreciation of the mountain bikes purchased on July 8 and kayaks purchased on August 4 totals $7,300.
Six months of the one-year insurance policy purchased on July 1 has expired.
Four months of the one-year rental agreement purchased on September 1 has expired.
Of the $1,700 of office supplies purchased on July 4, $350 remains.
Interest expense on the $39,000 loan obtained from the city council on August 1 should be recorded.
Of the $2,400 of racing supplies purchased on December 12, $160 remains.
Suzie calculates that the company owes $13,800 in income taxes.

image text in transcribed

3. Post transactions from July 1 through December 31 and adjusting entries on December 31 to T-accounts. Cash Prepaid Insurance 15,400 Beg. Bal. Jul. 1 Dec. 31 Beg. Bal. Aug. 1 Aug. 10 Aug. 17 Sep. 21 Aug. 4 Aug. 24 Sep. 1 End. Bal. 0 Dec. 8 Oct. 17 Dec. 16 Dec. 15 Dec. 31 End. Bal. 15,400 Prepaid Rent Supplies (Office) Beg. Bal. Beg. Bal. End. Bal. 0 End. Bal. 0 Supplies (Racing) Equipment (Bikes) Beg. Bal. Beg. Bal. End. Bal. 0 End. Bal. 0 Equipment (Kayaks) Accumulated Depreciation Beg. Bal. 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. 0 End. Bal. 0 Notes Payable Common Stock Beg. Bal. Beg. Bal. 26,000 Jul. 1 Jul. 1 End. Bal. 0 End. Bal. 26,000 Dividends Service Revenue (Clinic) 3,650 Beg. Bal. Beg. Bal. End. Bal. 0 End. Bal. 3,650 Service Revenue (Racing) Advertising Expense Beg. Bal. Beg. Bal. End. Bal. 0 End. Bal. 0 Legal Fees Expense Miscellaneous Expense Beg. Bal. Beg. Bal. End. Bal. 0 End. Bal. 0 Salaries Expense Depreciation Expense Beg. Bal. Beg. Bal. End. Bal. 0 End. Bal. 0 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. 0 End. Bal. Interest Expense Income Tax Expense Beg. Bal. Beg. Bal. End. Bal. 0 End. Bal. 0