Question

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 39,000 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 $19,500 of common stock to Suzie.
Jul.		1		Sell $19,500 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 $1,100 associated with incorporation.
Jul.		4		Purchase office supplies of $1,600 on account.
Jul.		7		Pay $220 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 $60 the day of the clinic.
Jul.		8		Purchase 10 mountain bikes, paying $10,500 cash.
Jul.		15		On the day of the clinic, Great Adventures receives cash of $3,600 from 60 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 $4,200.
Jul.		24		Pay $700 to a local radio station for advertising to appear immediately. A kayaking clinic will be held on August 10, and attendees can pay $120 in advance or $170 on the day of the clinic.
Jul.		30		Great Adventures receives cash of $8,400 in advance from 70 kayakers for the upcoming kayak clinic.

Prepare a trial balance. (The items in the Trial Balance should be grouped as follows: Assets, Liabilities, Stockholders' Equity, Revenue and Expenses.)

Answer 1

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Toni	Journal Entries
Date	Account	Debit	Credit
July 1st	Cash	19,500.00
	Common Stock		19,500.00
	(being share capital raised by providing cash)
July 1st	Cash	19,500.00
	Common Stock		19,500.00
	(being share capital raised by providing cash)
July 1st	Insurance Expense	5,760.00
	Cash		5,760.00
	(being Insurance Expense paid for the month)
July 2nd	Legal Fees	1,100.00
	Cash		1,100.00
	(being Legal Fees paid for the month)
July 4th	Office Supplies	1,600.00
	Accounts Payable		1,600.00
	(being office supplies purchased)
July 7th	Advertising	220.00
	Cash		220.00
	(being Advertising expense paid)
July 8th	Mountain Bikes	10,500.00
	Cash		10,500.00
	(being Mountain Bikes purchased)
July 15th	Cash	3,600.00
	Fee Earned		3,600.00
	(being fee earned)
July 20th	Cash	4,200.00
	Fee Earned		4,200.00
	(being fee earned)
July 24th	Advertising	700.00
	Cash		700.00
	(being Advertising expense paid)
July 30th	Cash	8,400.00
	Fee Earned		8,400.00
	(being fee earned)
July 30th	Prepaid Insurance	5,280.00
	Insurance Expense		5,280.00
	(being insurance expense adjusted.)

Cash
Date	Account	Debit	Credit	Balance
July 1st	Common Stock	19,500.00		19,500.00
July 1st	Common Stock	19,500.00		39,000.00
July 1st	Insurance Expense		5,760.00	33,240.00
July 2nd	Legal Fees		1,100.00	32,140.00
July 7th	Advertising		220.00	31,920.00
July 8th	Mountain Bikes		10,500.00	21,420.00
July 15th	Fee Earned	3,600.00		25,020.00
July 20th	Fee Earned	4,200.00		29,220.00
July 24th	Advertising		700.00	28,520.00
July 30th	Fee Earned	8,400.00		36,920.00
Common Stock
Date	Account	Debit	Credit	Balance
July 1st	Cash		19,500.00	19,500.00
July 1st	Cash		19,500.00	39,000.00
Insurance Expense
Date	Account	Debit	Credit	Balance
July 1st	Cash	5,760.00		5,760.00
July 30th	Prepaid Insurance		5,280.00	480.00
Prepaid Insurance
Date	Account	Debit	Credit	Balance
July 30th	Insurance Expense	5,280.00		5,280.00
Legal Fees
Date	Account	Debit	Credit	Balance
July 2nd	Cash	1,100.00		1,100.00
Office Supplies
Date	Account	Debit	Credit	Balance
July 4th	Accounts Payable	1,600.00		1,600.00
Advertising
Date	Account	Debit	Credit	Balance
July 7th	Cash	220.00		220.00
July 24th	Cash	700.00		920.00
Mountain Bikes
Date	Account	Debit	Credit	Balance
July 8th	Cash	10,500.00	-	10,500.00
Fee Earned
Date	Account	Debit	Credit	Balance
July 15th	Cash		3,600.00	3,600.00
July 20th	Cash		4,200.00	7,800.00
July 30th	Cash		8,400.00	16,200.00
Accounts Payable
Date	Account	Debit	Credit	Balance
July 4th	Office Supplies		1,600.00	1,600.00
				1,600.00

Trial Balance	Assets	Liabilities	Stockholders' Equity	Revenue	Expenses
Cash	36,920.00
Common Stock			39,000.00
Insurance Expense					480.00
Prepaid Insurance	5,280.00
Legal Fees					1,100.00
Office Supplies	1,600.00
Advertising					920.00
Mountain Bikes	10,500.00
Fee Earned				16,200.00
Accounts Payable		1,600.00
Total	54,300.00	1,600.00	39,000.00	16,200.00	2,500.00