Great Adventures obtains a $46,000 low-interest loan for the company from the ci
ID: 2425219 • Letter: G
Question
Great Adventures obtains a $46,000 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.
Twenty additional kayakers pay $3,200 ($160 each), in addition to the $5,500 that was paid in advance on July 30, on the day of the clinic. Tony conducts the first kayak clinic.
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 $3,720 ($310 per month).
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. Clinic fees total $19,700.
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 $550.
To help organize and promote the race, Tony hires his college roommate, Victor. Victor will be paid $50 in salary for each team that competes in the race. His salary will be paid after the race.
The company purchases racing supplies for $2,100 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.
Using his personal money, Tony purchases a diamond ring for $4,400. Tony surprises Suzie by proposing that they get married. Suzie accepts!
Depreciation of the mountain bikes purchased on July 8 and kayaks purchased on August 4 totals $8,800.
Aug. 1
Great Adventures obtains a $46,000 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, costing $14,300. Aug. 10Twenty additional kayakers pay $3,200 ($160 each), in addition to the $5,500 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 $11,400 cash. Aug. 24 Office supplies of $1,700 purchased on July 4 are paid in full. Sep. 1To 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 $3,720 ($310 per month).
Sep. 21 Tony conducts a rock-climbing clinic. The company receives $14,200 cash. Oct. 17Tony conducts an orienteering clinic. Participants practice how to understand a topographical map, read an altimeter, use a compass, and orient through heavily wooded areas. Clinic fees total $19,700.
Dec. 1Tony 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 $550.
Dec. 5To help organize and promote the race, Tony hires his college roommate, Victor. Victor will be paid $50 in salary for each team that competes in the race. His salary will be paid after the race.
Dec. 8 The company pays $1,700 to purchase a permit from a state park where the race will be held. The amount is recorded as a miscellaneous expense. Dec. 12The company purchases racing supplies for $2,100 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 Forty teams pay a total of $22,000 to race. The race is held. Dec. 16 The company pays Victor’s salary of $2,000. Dec. 31 The company pays a dividend of $3,800 ($1,900 to Tony and $1,900 to Suzie). Dec. 31Using his personal money, Tony purchases a diamond ring for $4,400. Tony surprises Suzie by proposing that they get married. Suzie accepts!
Explanation / Answer
The depreciation and non cash expenses should not be considered. the actual cash expenses should be accounted
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