Tony and Suzie graduate from college in May 2018 and begin developing their new
ID: 2519737 • Letter: T
Question
Tony and Suzie graduate from college in May 2018 and begin developing their new business. They begin by offering clinics for basic outdoo 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 r activities such as mountain biking or kayaking. Upon developing a customer base, they'll hold their first adventure races. 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 31,000 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 $15,500 of common stock to Suzie. Jul. 1 Sell $15,500 of common stock to Tony Jul. 1 Purchase a one-year insurance policy for $5,760 ($480 per month) to cover injuries to participants during outdoor clinics. Jul. 2 Pay legal fees of $1,300 associated with incorporation. Jul. 4 Purchase office supplies of $1,100 on account Jul. 7 Pay for advertising of $250 to a local newspaphr 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 10 mountain bikes, paying $15,600 cash. Jul. 15 On the day of the clinic, Great Adventures receives cash of $3,500 from 70 Jul. 22 Because of the success of the first mountain biking clinic, Tony holds another Jul. 24 Pay for advertising of $760 to a local radio station for a kayaking clinic to be Jul. 30 Great Adventures receives cash of $6,500 in advance from 50 kayakers for the Aug. 1 Great Adventures obtains a $40,000 low-interest loan for the company from the bikers. Tony conducts the mountain biking clinic mountain biking clinic and the company receives $3,900 held on August 10. Attendees can pay $130 in advance or $180 on the day of the clinic upcoming kayak clinicExplanation / Answer
The question is very long and all the parts cannot be completed within the available time frame. I was able to prepare journal entries, ledger and unadjusted trial balance (i.e entire Part 1 of the question) and Part 2) - Adjusting Entries.
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Part 1)
The journal entries are recorded as below:
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Ledgers
The ledgers and unadjusted trial balance are prepared as below:
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Unadjusted Trial Balance
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Part 2)
The adjusting entries are given as below:
Great Adventures Inc. - General Journal Date Account Titles Debit Credit 01-07-2018 Cash $15,500 Common Stock $15,500 01-07-2018 Cash $15,500 Common Stock $15,500 01-07-2018 Prepaid Insurance $5,760 Cash $5,760 02-07-2018 Legal Fees Expense $1,300 Cash $1,300 04-07-2018 Office Supplies $1,100 Accounts Payable $1,100 07-07-2018 Advertising Expense $250 Cash $250 08-07-2018 Equipment $15,600 Cash $15,600 15-07-2018 Cash $3,500 Biking Clinic Revenue $3,500 22-07-2018 Cash $3,900 Biking Clinic Revenue $3,900 24-07-2018 Advertising Expense $760 Cash $760 30-07-2018 Cash $6,500 Unearned Revenue $6,500 01-08-2018 Cash $40,000 Notes Payable $40,000 04-08-2018 Equipment $11,000 Cash $11,000 10-08-2018 Unearned Revenue $6,500 Cash $3,600 Kayak Clinic Revenue $10,100 17-08-2018 Cash $11,000 Kayak Clinic Revenue $11,000 24-08-2018 Accounts Payable $1,100 Cash $1,100 01-09-2018 Prepaid Rent $2,640 Cash $2,640 21-09-2018 Cash $13,500 Rock-Climbing Clinic Revenue $13,500 17-10-2018 Cash $19,800 Orienteering Clinic Revenue $19,800 01-12-2018 No Entry Required 05-12-2018 No Entry Required 08-12-2018 Miscellaneous Expense $1,500 Cash $1,500 12-12-2018 Racing Supplies $2,500 Accounts Payable $2,500 15-12-2018 Cash $25,200 Adventure Race Revenue $25,200 16-12-2018 Salaries Expense $2,400 Cash $2,400 31-12-2018 Dividends $3,800 Cash $3,800 31-12-2018 No Entry Required