Question

Great Adventures Problem AP10-1 (GL)

Tony and Suzie have purchased land for a new camp. Now they need money to build the cabins, dining facility, a ropes course, and an outdoor swimming pool. Tony and Suzie first checked with Summit Bank to see if they could borrow an additional $1 million, but unfortunately the bank turned them down as too risky. Undeterred, they promoted their idea to close friends they had made through the outdoor clinics and TEAM events. They decided to go ahead and sell shares of stock in the company to raise the additional funds for the camp.

Great Adventures has authorized $1 par value common stock. When the company began on July 1, 2021, Tony and Suzie each purchased 10,000 shares (20,000 shares total) of $1 par value common stock at $1 per share. The following transactions affect stockholders’ equity during the remainder of 2022:

November	5		Issue an additional 126,000 shares of common stock for $10 per share.
November	16		Purchase 12,600 shares of its own common stock (i.e., treasury stock) for $28 per share.
November	24		Resell 6,600 shares of treasury stock at $29 per share.
December	1		Declare a cash dividend on its common stock of $14,000 ($0.10 per share) to all stockholders of record on December 15.
December	20		Pay the cash dividend declared on December 1.
December	31		Pay $865,000 for construction of new cabins and other facilities. The entire expenditure is recorded in the Buildings account.

requirements :

1. Record each of the transactions listed above in the 'General Journal' tab. Review the 'General Ledger' and the 'Trial Balance' tabs to see the effect of the transactions on the account balances.

2. Review the 'Trial Balance' as of December 31, 2022, in the 'Trial Balance' tab.

3. Prepare a multiple-step income statement for the period ended December 31, 2022, in the 'Income Statement' tab.

4. Prepare a classified balance sheet as of December 31, 2022, in the 'Balance Sheet' tab.

5. Record the closing entries in the 'General Journal' tab.

general journal (Nov 5 -Dec 31 (3))

income statement

balance sheet

Answer 1

Date	journal entries	Dr.($)	Dr.($)
Nov-05	cash	1260000
	To common stock		126000
	To additional paid in capital		1134000
	(to record issue of shares)
Nov-16	treasury stock	352800
	To cash		352800
	(to record purchase of treasury stock)
Nov-24	cash	191400
	To treasury stock		184800
	To additional paid in capital		6600
	(to record sale of treasury stock)
Dec-01	retained earnings	14000
	To dividends payable		14000
	(to record declaration of dividend)
Dec-15	NO ENTRY
Dec-20	dividends payable	14000
	To cash		14000
	(to record payment of dividend)
Dec-31	capital expenditure	865000
	To cash		865000
	(to record capital expenditure)
	Great Adventures
	Balance Sheet
	(stockholders equity section)
	Dec.31, 2022
	stockholders equity:
	common stock
	beginning	20000
	additional issuance	126000
	total common stock		146000
	additional paid in capital
	common stock	1134000
	treasury stock	6600
	total additional paid in capital		1140600
	retained earnings		14000
	treasury stock		-168000
	total stockholders equity		1132600