Great Adventures obtains a $47,000 low-interest loan for the company from the ci
ID: 2481477 • Letter: G
Question
Great Adventures obtains a $47,000 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 $3,600 ($180 each), in addition to the $9,100 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 $3,240 ($270 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 $19,000.
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 $560.
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 $2,600 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 $5,000. 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 $8,200.
A)
Record transactions from August 1 through December 31
B)
Record adjusting entries as of December 31, 2015
C)
Post transactions from August 1 through December 31 and adjusting entries on December 31 to T-accounts.
D)
Prepare an adjusted trial balance as of December 31, 2015. (The items in the Trial Balance should be grouped as follows: Assets, Liabilities, Equity, Dividends, Revenues, and Expenses.)
E)
For the period July 1 to December 31, 2015, prepare an income statement.
For the period July 1 to December 31, 2015, prepare an statement of stockholders’ equity. All account balances on July 1 were zero. (Amounts to be deducted should be indicated with minus sign.)
Prepare a classified balance sheet as of December 31, 2015.
F) Record closing entries as of December 31, 2015.
G)Post the closing entries of retained earnings to the T-accounts.
H)
Prepare a post-closing trial balance as of December 31, 2015. (The items in the Trial Balance should be grouped as follows: Assets, Liabilities, Equity.)
The following transactions occur over the remainder of the year.Explanation / Answer
Answer a. Journal Entry Date Particulars Dr. Amt. Cr. Amt. Aug-01 Cash Dr. 47,000 To Loan - Liability 47,000 Aug-04 Equipments Kayaks Dr. 16,800 To Cash 16,800 Aug-10 Cash Dr. 3,600 Unearned Revenue Dr. 9,100 To service Revenue (Clinic) 12,700 Aug-17 Cash Dr. 10,800 To Service Revenue (Clinic) 10,800 Aug-24 Accounts Payable Dr. 1,200 To Cash 1,200 Sep-01 Prepaid Rent Dr. 3,240 To Cash 3,240 Oct-17 Cash Dr. 19,000 To service Revenue - Clinic 19,000 Dec-01 No Entry Dec-05 No Entry Dec-08 Misc Exp. Dr. 1,800 To Cash 1,800 Dec-12 Supplies (Racing) Dr. 2,600 To Accounts Payable 2,600 Dec-15 Cash Dr. 22,400 To Service Revenue (Racing) 22,400 Dec-16 Salary Dr. 2,000 To Cash 2,000 Dec-31 Dividend Dr. 4,000 To Cash 4,000 Dec-31 No Entry - Personal Expenditure Not related to Buisness Answer 2. Journal Entry Adjusting Entry Date Particulars Dr. Amt. Cr. Amt. a Dep. Exp. Dr. 8,200 To Accumulated Dep - Equip. 8,200 b Insurance Exp. Dr. 2,820 To Prepaid Insurance 2,820 c Rent Exp. Dr. 1,080 To Prepaid Rent 1,080 d Supplies Exp. Dr. 980 To supplies (Office) 980 e Interest Exp. Dr. 1,175 To Interest Payable 1,175 f Supplies Exp. Dr. 2,380 To Supplies (Racing) 2,380 g Income Tax Expense Dr. 13,900 To Income Tax Payable 13,900 Answer c. Cash Prepaid Insurance Beg. Bal 12,020.00 16,800 Aug-04 Beg. Bal 5,640.00 2,820.00 b Aug-01 47,000.00 1,200.00 Aug-24 Aug-10 3,600.00 3,240.00 Sep-01 Aug-17 10,800.00 1,800.00 Dec-08 Oct-17 19,000.00 2,000.00 Dec-16 Dec-15 22,400.00 4,000.00 Dec-31 End. Bal 85,780.00 End. Bal 2,820.00 Supplies (office) Equipment (Bikes) Beg. Bal 1,200.00 980.00 d Beg. Bal 17,100.00 End. Bal 220.00 End. Bal 17,100.00 Accounts Payable Unearned revenue Beg. Bal 1,200.00 Beg. Bal 9,100.00 Aug-24 1,200.00 2,600.00 Dec-12 Aug-10 9,100.00 End. Bal 2,600.00 End. Bal - Common Stock Service Revenue (Clinic) Beg. Bal 22,000.00 Beg. Bal 6,300.00 3,600.00 Aug-10 9,100.00 Aug-10 10,800.00 Aug-17 19,000.00 Oct-17 End. Bal 22,000.00 End. Bal 48,800.00 Advertising Exp. Legal fees Exp. Beg. Bal 840.00 Beg. Bal 1,800.00 End. Bal 840.00 End. Bal 1,800.00 Loan Liability Equipment - Kayaks Beg. Bal - Beg. Bal - 47,000.00 Aug-01 Aug-04 16,800.00 End. Bal 47,000.00 End. Bal 16,800.00 Prepaid rent Misc Exp. Beg. Bal - 1,080.00 c Beg. Bal - Sep-01 3,240.00 Dec-08 1,800.00 End. Bal. 2,160.00 End. Bal. 1,800.00 Supplies (Racing) Service Revenue (Racing) Beg. Bal - 2,380.00 f Beg. Bal - Dec-12 2,600.00 22,400.00 Dec-15 End. Bal. 220.00 End. Bal. 22,400.00 Salaries Exp. Dividends Beg. Bal - Beg. Bal - Dec-16 2,000.00 Dec-31 4,000.00 End. Bal. 2,000.00 End. Bal. 4,000.00 Dep. Exp. Accumulated Dep. - Equipments Beg. Bal - Beg. Bal - a 8,200.00 8,200.00 a End. Bal. 8,200.00 End. Bal. 8,200.00 Insurance Exp. Rent Exp. Beg. Bal - Beg. Bal - b 2,820.00 c 1,080.00 End. Bal. 2,820.00 End. Bal. 1,080.00 Supplies Exp. Interest Exp. Beg. Bal - Beg. Bal - d 980.00 e 1,175.00 f 2,380.00 End. Bal. 3,360.00 End. Bal. 1,175.00 Interest Payable Income Tax Exp. Beg. Bal - Beg. Bal - 1,175.00 e g 13,900.00 End. Bal. 1,175.00 End. Bal. 13,900.00 Income Tax Payable Beg. Bal - 13,900.00 g End. Bal. 13,900.00 Answer D. Trial Balance As of Dec 31 Assets Cash 85,780.00 Prepaid Insurance 2,820.00 Supplies (office) 220.00 Equipment (Bikes) 17,100.00 Equipment - Kayaks 16,800.00 Prepaid rent 2,160.00 Supplies (Racing) 220.00 Accumulated Dep. - Equipments 8,200.00 Liabilities Accounts Payable 2,600.00 Loan Liability 47,000.00 Interest Payable 1,175.00 Income Tax Payable 13,900.00 Equity Common Stock 22,000.00 Dividends Dividends 4,000.00 Revenues Service Revenue (Clinic) 48,800.00 Service Revenue (Racing) 22,400.00 Expenses Advertising Exp. 840.00 Legal fees Exp. 1,800.00 Misc Exp. 1,800.00 Salaries Exp. 2,000.00 Dep. Exp. 8,200.00 Insurance Exp. 2,820.00 Rent Exp. 1,080.00 Supplies Exp. 3,360.00 Interest Exp. 1,175.00 Income Tax Exp. 13,900.00 Total 166,075.00 166,075.00 As per Chegg Guidelines, You can ask only one question at a time having four subparts. For other parts or Questions please ask it again.
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