Question

On July 1, 2018, Tony and Suzie organize their new company as a corporation, Great Adventures Inc. The following transactions occur from August 1 through December 31. Also, the balances are provided for the month ended July 31.  
  
Aug. 1 Great Adventures obtains a $30,000 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 $28,000 cash.
Aug. 10 Twenty additional kayakers pay $3,000 ($150 each), in addition to the $4,000 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 $10,500 cash.
Aug. 24 Office supplies of $1,800 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, purchasing a one-year rental policy for $2,400 ($200 per month).
Sep. 21 Tony conducts a rock-climbing clinic. The company receives $13,200 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 $17,900 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 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 $1,200 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 $2,800 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 $20,000 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 $4,000 ($2,000 to Tony and $2,000 to Suzie).
Dec. 31 Using his personal money, Tony purchases a diamond ring for $4,500. Tony surprises Suzie by proposing that they get married. Suzie accepts and they get married!

Assume the following ending balances for the month of July.

	Balance
Cash	$	9,000
Prepaid insurance		4,800
Supplies (Office)		1,800
Equipment (Bikes)		12,000
Accounts payable		1,800
Deferred revenue		4,000
Common stock		20,000
Service revenue (Clinic)		4,300
Advertising expense		1,000
Legal fees expense		1,500

.
4. Prepare an adjusted trial balance as of December 31, 2018. (The items in the Trial Balance should be grouped as follows: Assets, Contra-asset accounts, Liabilities, Equity, Dividends, Revenues, and Expenses.)
  
  

Answer 1

Trial Balance is as prepared below:

Great Adventures Inc
Trial Balance
As of December 31, 2018
	Debit	Credit
Cash	64,200
Prepaid insurance	4,800
Supplies (Office)	1,800
Supplies (Racing)	2,800
Equipment (Bikes)	12,000
Equipment (Kayaks)	28,000
Prepaid Rent	2,400
Accounts payable		2,800
Long term loan payable		30000
Common stock		20000
Service revenue (Clinic)		52900
Service Revenue (Racing)		20000
Advertising expense	1000
Legal fees expense	1500
Miscellaneous exp	1,200
Salary expense	2,000
Dividend Expense	4,000
Total	125,700	125,700

Working Notes:

Balance		Aug-01	Aug-04	Aug-10	Aug-17	Aug-24	Sep-01	Sep-21	Oct-17	Dec-01	Dec-05	Dec-08	Dec-12	Dec-15	Dec-16	Dec-31	Dec-31		Closing Balance
Cash	9,000	30,000	-28,000	3,000	10,500	-1,800	-2,400	13,200	17,900	No entry	No entry	-1,200		20,000	-2,000	-4,000	No entry		64200
Prepaid insurance	4,800																		4800
Supplies (Office)	1,800																		1800
Supplies (Racing)													2,800						2800
Equipment (Bikes)	12,000																		12000
Equipment (Kayaks)			28,000																28000
Prepaid Rent							2,400												2400
Accounts payable	1,800					-1,800							2,800						2800
Deferred revenue	4,000			-4,000															0
Long term loan payable		30,000																	30000
Common stock	20,000																		20000
Service revenue (Clinic)	4,300			7000	10,500			13,200	17,900										52900
Service Revenue (Racing)														20,000					20000
Advertising expense	1,000																		1000
Legal fees expense	1,500																		1500
Miscellaneous exp												1,200							1200
Salary expense															2,000				2000
Dividend Expense																4,000			4000