The following transactions occur over the remainder of the year. |
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 $22,000. |
Aug. | 10 |
Twenty additional kayakers pay $3,600 ($180 each), in addition to the $6,500 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 $11,900 cash. |
Aug. | 24 | Office supplies of $1,100 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 $3,480 ($290 per month).
|
Sep. | 21 | Tony conducts a rock-climbing clinic. The company receives $14,200 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 $19,300.
|
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 $560.
|
Dec. | 5 |
To help organize and promote the race, Tony hires his college roommate, Victor. Victor will be paid $30 in salary for each team that competes in the race. His salary will be paid after the race.
|
Dec. | 8 | The company pays $1,300 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 $22,400 to race. The race is held. |
Dec. | 16 | The company pays Victor’s salary of $1,200. |
Dec. | 31 | The company pays a dividend of $4,700 ($2,350 to Tony and $2,350 to Suzie). |
Dec. | 31 |
Using his personal money, Tony purchases a diamond ring for $4,300. Tony surprises Suzie by proposing that they get married. Suzie accepts!
|
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 $1,100 of office supplies purchased on July 4, $400 remains. |
e. | Interest expense on the $46,000 loan obtained from the city council on August 1 should be recorded. |
f. | Of the $2,800 of racing supplies purchased on December 12, $140 remains. |
g. | Suzie calculates that the company owes $14,100 in income taxes. |
Assume the following ending balances for the month of July. |
Balance | ||
Cash | $ | 24,940 |
Prepaid insurance | 5,280 | |
Supplies (Office) | 1,100 | |
Equipment (Bikes) | 11,000 | |
Accounts payable | 1,100 | |
Unearned revenue | 6,500 | |
Common stock | 28,000 | |
Service revenue (Clinic) | 8,900 | |
Advertising expense | 980 | |
Legal fees expense | 1,200 | |
|
Required: |
1. |
Record transactions from August 1 through December 31. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)
|
4. |
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.)
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