Additional Perspectives 2-1 [The following information applies to the questions

Question

Additional Perspectives 2-1 [The following information applies to the questions displayed below. Tony and Suzie graduate from college in May 2018 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 usinga 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, 2018, Tony and Suzie organize their new company as a corporation, Great Adventures Inc. The articles of incorporation state that the corporation will sell 34,000 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 $17,000 of common stock to Suzie. Jul. 1 Sell $17,000 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 $1,600 associated with incorporation. Jul. 4 Purchase office supplies of $1,100 on account. Jul. 7 Pay for advertising of $320 to a local newspaper for an upcoming mountain biking clinic to be held on July 15. Attendees will be charged $40 the day of the clinic Jul. 8 Purchase 10 mountain bikes, paying $10,400 cash. Jul. 15 On the day of the clinic, Great Adventures receives cash of $1,600 from 40 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 $2,000. Jul. 24 Pay for advertising of $900 to a local radio station for a kayaking clinic to be held on August 10. Attendees can pay $150 in advance or $200 on the day of the clinic. Jul. 30 Great Adventures receives cash of $9,000 in advance from 60 kayakers for the upcoming kayak clinic.

Explanation / Answer

Great Adventures Inc. Date Account Title Debit Credit July 1 2018 Cash 17000 Common Stock 17000 (Sale of Common stock to Suzie) Cash 17000 Common Stock 17000 (Sale of Common stock to Tony) Insurance expense 5760 Cash 5760 (Purchase of 1 Yr. Insurance policy ) 2-Jul Legal fees 1600 Cash 1600 (Fees asociated with incorporation) 4-Jul Office supplies 1100 Accounts payable 1100 7-Jul Advertisinig expenses 320 Cash 320 (for the upcoming mountain biking clinic on July 15) 8-Jul Equipment-Bikes 10400 Cash 10400 15-Jul Cash 1600 Mountain biking revenues 1600 22-Jul Cash 2000 Mountain biking revenues 2000 24-Jul Advertising expense 900 Cash 900 (Towards radio ad. For kayaking clinic on Aug 10) 30-Jul Cash 9000 Unearned Kayaking revenue 9000

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