The transactions for July presented in AP 2–1 (on pages 103–104) are repeated here.July 1 Sell $10,000 of common stock to Suzie.1 Sell $10,000 of common stock to Tony.1 Purchase a one-year insurance policy for $4,800 ($400 per month) to cover injuries to participants during outdoor clinics.2 Pay legal fees of $1,500 associated with incorporation.4 Purchase office supplies of $1,800 on account.7 Pay for advertising of $300 to a local newspaper for an upcoming mountain biking clinic to be held on July 15. Attendees will be charged $50 the day of the clinic.8 Purchase 10 mountain bikes, paying $12,000 cash.15 On the day of the clinic, Great Adventures receives cash of $2,000 from 40 bikers. Tony conducts the mountain biking clinic.22 Because of the success of the first mountain biking clinic, Tony holds another mountain biking clinic and the company receives $2,300.24 Pay for advertising of $700 to a local radio station for a kayaking clinic to be held on August 10. Attendees can pay $100 in advance or $150 on the day of the clinic.30 Great Adventures receives cash of $4,000 in advance from 40 kayakers for the upcoming kayak clinic.The following transactions occur over the remainder of the year.Aug. 1 Great Adventures obtains a $30,000 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 $28,000. Aug. 10 Twenty additional kayakers pay $3,000 ($150 each), in addition to the $4,000 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 $10,500 cash. Aug. 24 Office supplies of $1,800 purchased on July 4 are paid in full. Sep. 1 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 $2,400 ($200 per month). Sep. 21 Tony conducts a rock-climbing clinic. The company receives $13,200 cash. Oct. 17 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 $17,900. Dec. 1 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 $500. Dec. 5 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. Dec. 8 The company pays $1,200 to purchase a permit from a state park where the race will be held. The amount is recorded as a miscellaneous expense. Dec. 12 The Company purchases racing supplies for $2,800 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 $20,000 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 $4,000 ($2,000 to Tony and $2,000 to Suzie). Dec. 31 Using his personal money, Tony purchases a diamond ring for $4,500. Tony surprises Suzie by proposing that they get married. Suzie accepts and they get married! The following information relates to year-end adjusting entries as of December 31, 2015.a. Depreciation of the mountain bikes purchased on July 8 and kayaks purchased on August 4 totals $8,000. b. Six months’ worth of insurance has expired. c. Four months’ worth of rent has expired. d. Of the $1,800 of office supplies purchased on July 4, $300 remains. e. Interest expense on the $30,000 loan obtained from the city council on August 1 should be recorded. f. Of the $2,800 of racing supplies purchased on December 12, $200 remains. g. Suzie calculates that the company owes $14,000 in income taxes.Required: 1. Record transactions from August 1 through December 31. 2. Record adjusting entries as of December 31, 2015. 3. Post transactions from August 1 through December 31 and adjusting entries on December 31 to T-accounts. 4. Prepare an adjusted trial balance as of December 31, 2015. 5. For the period July 1 to December 31, 2015, prepare an income statement and statement of stockholders’ equity. Prepare a classified balance sheet as of December 31, 2015. 6. Record closing entries as of December 31, 2015. 7. Post closing entries to T-accounts. 8. Prepare a post-closing trial balance as of December 31, 2015.View Solution:
The transactions for July presented in AP 2 1 on pages

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