Question

[The following information applies to the questions displayed below.] 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 29,000 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 business activities occur during July for Great Adventures.

Jul. 1 Sell $14,500 of common stock to Suzie. Jul. 1 Sell $14,500 of common stock to Tony. Jul. 1 Purchase a one-year insurance policy for $5,880 ($490 per month) to cover injuries to participants during outdoor clinics. Jul. 2 Pay legal fees of $1,700 associated with incorporation. Jul. 4 Purchase office supplies of $1,800 on account. Jul. 7 Pay $380 to a local newspaper for advertising to appear immediately for an upcoming mountain biking clinic to be held on July 15. Attendees will be charged $50 the day of the clinic. Jul. 8 Purchase 10 mountain bikes, paying $10,700 cash. Jul. 15 On the day of the clinic, Great Adventures receives cash of $3,500 from 70 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 $4,000. Jul. 24 Pay $860 to a local radio station for advertising to appear immediately. A kayaking clinic will be held on August 10, and attendees can pay $130 in advance or $180 on the day of the clinic. Jul. 30 Great Adventures receives cash of $7,800 in advance from 60 kayakers for the upcoming kayak clinic.

1.)Record each transaction in July.

2.) Post each transaction to the appropriate T-accounts and calculate the ending balance of each account

3.)Prepare a trial balance.

Answer 1

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	Journal Entries				Cash
Date	Account	Debit	Credit		Date	Account	Debit	Credit	Balance
July 1st	Cash	14,500.00			July 1st	Common Stock	14,500.00		14,500.00
	Common Stock		14,500.00		July 1st	Common Stock	14,500.00		29,000.00
	(being share capital raised by providing cash)				July 1st	Insurance Expense		5,880.00	23,120.00
					July 2nd	Legal Fees		1,700.00	21,420.00
July 1st	Cash	14,500.00			July 4th	Office Supplies		1,800.00	19,620.00
	Common Stock		14,500.00		July 7th	Advertising		380.00	19,240.00
	(being share capital raised by providing cash)				July 8th	Mountain Bikes		10,700.00	8,540.00
					July 15th	Fee Earned	3,500.00		12,040.00
July 1st	Insurance Expense	5,880.00			July 20th	Fee Earned	4,000.00		16,040.00
	Cash		5,880.00		July 24th	Advertising		860.00	15,180.00
	(being Insurance Expense paid for the month)				July 30th	Fee Earned	7,800.00		22,980.00
July 2nd	Legal Fees	1,700.00			Common Stock
	Cash		1,700.00		Date	Account	Debit	Credit	Balance
	(being Legal Fees paid for the month)				July 1st	Cash		14,500.00	14,500.00
					July 1st	Cash		14,500.00	29,000.00
July 4th	Office Supplies	1,800.00
	Cash		1,800.00		Insurance Expense
	(being office supplies purchased)				Date	Account	Debit	Credit	Balance
					July 1st	Cash	5,880.00		5,880.00
July 7th	Advertising	380.00			July 30th	Prepaid Insurance		5,390.00	490.00
	Cash		380.00
	(being Advertising expense paid)				Prepaid Insurance
					Date	Account	Debit	Credit	Balance
July 8th	Mountain Bikes	10,700.00			July 30th	Insurance Expense	5,390.00		5,390.00
	Cash		10,700.00
	(being Mountain Bikes purchased)				Legal Fees
					Date	Account	Debit	Credit	Balance
July 15th	Cash	3,500.00			July 2nd	Cash	1,700.00		1,700.00
	Fee Earned		3,500.00
	(being fee earned)				Office Supplies
					Date	Account	Debit	Credit	Balance
July 20th	Cash	4,000.00			July 4th	Cash	1,800.00		1,800.00
	Fee Earned		4,000.00
	(being fee earned)				Advertising
					Date	Account	Debit	Credit	Balance
July 24th	Advertising	860.00			July 7th	Cash	380.00		380.00
	Cash		860.00		July 24th	Cash	860.00		1,240.00
	(being Advertising expense paid)
					Mountain Bikes
July 30th	Cash	7,800.00			Date	Account	Debit	Credit	Balance
	Fee Earned		7,800.00		July 8th	Cash	10,700.00	-	10,700.00
	(being fee earned)
					Fee Earned
July 30th	Prepaid Insurance	5,390.00			Date	Account	Debit	Credit	Balance
	Insurance Expense		5,390.00		July 15th	Cash		3,500.00	3,500.00
	(being insurance expense adjusted.)				July 20th	Cash		4,000.00	7,500.00
					July 30th	Cash		7,800.00	15,300.00
	Trial Balance	Debit	Credit
	Cash	22,980.00
	Common Stock		29,000.00
	Insurance Expense	490.00
	Prepaid Insurance	5,390.00
	Legal Fees	1,700.00
	Office Supplies	1,800.00
	Advertising	1,240.00
	Mountain Bikes	10,700.00
	Fee Earned		15,300.00
	Total	44,300.00	44,300.00