Tony and Suzie are ready to expand Great Adventures even
further in 2022. Tony believes that many groups in the community
(for example, Boy Scouts, church groups, civic groups, and local
businesses) would like to hold one-day outings for their members.
Groups would engage in outdoor activities such as rock climbing,
fishing, capture the flag, paintball, treasure hunts, scavenger
hunts, nature hikes, and so on. The purpose of these one-day events
would be for each member of the group to learn the importance of
TEAM (Together Everyone Achieves More).
Tony knows that most people are not familiar with these types
of activities, so to encourage business he allows groups to
participate in the event before paying. He offers a 6%
quick-payment discount to those that pay within 10 days after the
event. He also guarantees that at least eight hours of outdoor
activities will be provided or the customer will receive a 20%
discount. For the first six months of the year, the following
activities occur for TEAM operations.
Jan. 24 Great Adventures purchases outdoor gear such as ropes,
helmets, harnesses, compasses, and other miscellaneous equipment
for $4,300 cash.
Feb. 25 Mr. Kendall’s Boy Scout troop participates in a
one-day TEAM adventure. Normally, Tony would charge a group of this
size $2,800, but he wants to encourage kids to exercise more and
enjoy the outdoors so he charges the group only $2,300. Great
Adventures provides these services on account.
Feb. 28 The Boy Scout troop pays the full amount owed, less
the 6% quick-payment discount.
Mar. 19 Reynold’s Management has its employees participate in
a one-day TEAM adventure. Great Adventures provides services on
account for $3,300, and Reynold’s agrees to pay within 30
days.
Mar. 27 Reynold’s pays the full amount owed, less the 6%
quick-payment discount.
Apr. 7 Several men from the Elks Lodge decide to participate
in a TEAM adventure. They pay $6,800, and the event is scheduled
for the following week.
Apr. 14 The TEAM adventure is held for members of the Elks
Lodge.
Apr. 30 Myers Manufacturing participates in a TEAM adventure.
Great Adventures provides services on account for $54,000, and
Myers agrees to pay within 30 days.
May 31 Myers Manufacturing fails to pay the amount owed within
the specified period and agrees to sign a three-month, 8% note
receivable to replace the existing account receivable.
Jun. 15 Several MBA groups participate in TEAM adventures.
Great Adventures provides services on account for $20,500 to these
groups, with payment due in July.
Consider the following information as of June 30, 2022.
Suzie estimates uncollectible accounts to be 5% of accounts
receivable (which does not include the $54,000 note receivable from
Myers Manufacturing). Prepare the adjusting entry for uncollectible
accounts.
Accrue one month of interest on the note receivable from Myers
Manufacturing.
Prepare General journal, general ledger, trial balance, income
statement, and balance sheet.