Question

Great Adventures Problem 3-1

[The following information applies to the questions displayed below.]
  
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.
  
The articles of incorporation state that the corporation will sell 33,000 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 $16,500 of common stock to Suzie.
Jul. 1 Sell $16,500 of common stock to Tony.
Jul. 1 Purchase a one-year insurance policy for $3,720 ($310 per month) to cover injuries to participants during outdoor clinics.
Jul. 2 Pay legal fees of $1,500 associated with incorporation.
Jul. 4 Purchase office supplies of $1,700 on account.
Jul. 7 Pay for advertising of $280 to a local newspaper for an upcoming mountain biking clinic to be held on July 15. Attendees will be charged $60 the day of the clinic.
Jul. 8 Purchase 10 mountain bikes, paying $19,200 cash.
Jul. 15 On the day of the clinic, Great Adventures receives cash of $4,200 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 $4,550.
Jul. 24 Pay for advertising of $830 to a local radio station for a kayaking clinic to be held on August 10. Attendees can pay $140 in advance or $190 on the day of the clinic.
Jul. 30 Great Adventures receives cash of $8,400 in advance from 60 kayakers for the upcoming kayak clinic.
Aug. 1 Great Adventures obtains a $44,000 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 $18,000 cash.
Aug. 10 Twenty additional kayakers pay $3,800 ($190 each), in addition to the $8,400 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 $12,300 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, purchasing a one-year rental policy for $3,360 ($280 per month).
Sep. 21 Tony conducts a rock-climbing clinic. The company receives $14,500 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 $18,000 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 $630.Dec. 5 To help organize and promote the race, Tony hires his college roommate, Victor. Victor will be paid $30 in salary for each team that competes in the race. His salary will be paid after the race.Dec. 8 The company pays $1,600 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 $25,200 cash from a total of forty teams, and the race is held.Dec. 16 The company pays Victor’s salary of $1,200.
Dec. 31 The company pays a dividend of $3,200 ($1,600 to Tony and $1,600 to Suzie).
Dec. 31 Using his personal money, Tony purchases a diamond ring for $4,700. 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, 2018.
  
a. Depreciation of the mountain bikes purchased on July 8 and kayaks purchased on August 4 totals $9,000.
b. Six months’ worth of insurance has expired.
c. Four months’ worth of rent has expired.
d. Of the $1,700 of office supplies purchased on July 4, $300 remains.
e. Interest expense on the $44,000 loan obtained from the city council on August 1 should be recorded.
f. Of the $2,400 of racing supplies purchased on December 12, $190 remains.
g. Suzie calculates that the company owes $13,100 in income taxes.
  
Assume the following ending balances for the month of July.

	Balance
Cash	$	24,620
Prepaid insurance		3,720
Supplies (Office)		1,700
Equipment (Bikes)		19,200
Accounts payable		1,700
Deferred revenue		8,400
Common stock		33,000
Service revenue (Clinic)		8,750
Advertising expense		1,110
Legal fees expense		1,500

Required:
1. Record transactions from July 1 through December 31. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Date	account titles and explanation	debit	credit
July 1 2018	cash	16500
	Common Stock		16500
July 1 2018	cash	16500
	Common Stock		16500
July 1 2018	prepaid insurance	3720
	Cash		3720
July 2 2018	legal fees expense	1500
	Cash		1500
July 4 2018	supplies	1700
	Accounts Payable		1700
July 7 2018	advertising expense	280
	Cash		280
July 8 2018	equipment	19200
	Cash		19200
July 15 2018	cash	4200
	Service Revenue		4200
July 22 2018	cash	4550
	Service Revenue		4550
July 24 2018	advertising expense	830
	Cash		830
July 30 2018	Cash	8400
	Unearned revenue		8400
Aug 1 2018	cash	44000
	Notes Payable		44000
Aug 4 2018	equipment (kayaks)	18000
	Cash		18000
Aug 10 2018	cash	3800
	Unearned revenue	8400
	Service Revenue (clinic)		11200
Aug 17 2018	cash	12300
	Service Revenue (clinic)		12300
Aug 24 2018	accounts payable	1700
	Cash		1700
Sep 1 2018	prepaid rent	3360
	Cash		3360
Sep 21 2018	cash	14500
	Service Revenue (clinic)		14500
Oct 17 2018	cash	18000
	Service Revenue (clinic)		18000
Dec 1 2018	no journal entry required
Dec 5 2018	no journal entry required
Dec 8 2015	Miscellaneous expense	1600
	Cash		1600
Dec 12 2018	Supplies (racing)	2400
	Accounts Payable		2400
Dec 15 2018	Cash	25200
	Service Revenue (racing)		25200
Dec 16 2018	Salaries expense	1200
	Cash		1200
Dec 31 2018	Dividend	3200
	Cash		3200
Dec 31 2018	no journal entry required