Question

On July 1, 2021, Tony and Suzie organize their new company as a corporation, Great Adventures Inc. The articles of incorporation state that the corporation will sell 21,000 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 transactions occur from July 1 through December 31.

Jul.		1		Sell $10,500 of common stock to Suzie.
Jul.		1		Sell $10,500 of common stock to Tony.
Jul.		1		Purchase a one-year insurance policy for $4,560 ($380 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 $1,900 on account.
Jul.		7		Pay for advertising of $350 to a local newspaper for an upcoming mountain biking clinic to be held on July 15. Attendees will be charged $50 on the day of the clinic.
Jul.		8		Purchase 10 mountain bikes, paying $13,500 cash.
Jul.		15		On the day of the clinic, Great Adventures receives cash of $3,000 from 60 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 $3,400.
Jul.		24		Pay $760 to a local radio station for advertising to appear immediately. A kayaking clinic will be held on August 10, and attendees can pay $110 in advance or $160 on the day of the clinic.
Jul.		30		Great Adventures receives cash of $5,500 in advance from 50 kayakers for the upcoming kayak clinic.
Aug.		1		Great Adventures obtains a $35,000 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, paying $22,100 cash.
Aug.		10		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.
Aug.		17		Tony conducts a second kayak clinic, and the company receives $12,000 cash.
Aug.		24		Office supplies of $1,900 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 for one year, paying $4,200 ($350 per month) in advance.
Sep.		21		Tony conducts a rock-climbing clinic. The company receives $15,200 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. The company receives $19,600 cash.
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 $540.
Dec.		5		To help organize and promote the race, Tony hires his college roommate, Victor. Victor will be paid $60 in salary for each team that competes in the race. His salary will be paid after the race.
Dec.		8		The company pays $1,500 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 $2,100 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		The company receives $21,600 cash from a total of forty teams, and the race is held.
Dec.		16		The company pays Victor’s salary of $2,400.
Dec.		31		The company pays a dividend of $3,600 ($1,800 to Tony and $1,800 to Suzie).
Dec.		31		Using his personal money, Tony purchases a diamond ring for $4,100. 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, 2021.

1. Depreciation of the mountain bikes purchased on July 8 and kayaks purchased on August 4 totals $7,120.
2. Six months’ of the one-year insurance policy purchased on July 1 has expired.
3. Four months of the one-year rental agreement purchased on September 1 has expired.
4. Of the $1,900 of office supplies purchased on July 4, $400 remains.
5. Interest expense on the $35,000 loan obtained from the city council on August 1 should be recorded.
6. Of the $2,100 of racing supplies purchased on December 12, $280 remains.
7. Suzie calculates that the company owes $14,700 in income taxes.

create General Journal

Answer 1

Journal entry:
Date	General journal					Debit	Credit
Jul 1.	Cash		(10500+10500)			21000
	Common stock						21000
	(Issued common stock to tony and suzie)
Jul 1.	Prepaid insurance					4560
	Cash						4560
	(Insurance policy paid for 1 year)
Jul 2.	Legal fees expense					1600
	Cash						1600
	(Legal expense paid)
Jul 4.	Supplies (Office)					1900
	Accounts payable						1900
	(Purchase of office supplies on account)
Jul 7.	Advertising expense					350
	Cash						350
	(Advertising expense paid)
Jul 8.	Equipment (Bikes)					13500
	Cash						13500
	(Bikes purchased)
Jul 15.	Cash					3000
	Service revenue (Clinic)						3000
	(Received cash from bikers)
Jul 22.	Cash					3400
	Service revenue (Clinic)						3400
	(Received cash from bikers)
Jul 24.	Advertising expense					760
	Cash						760
	(Advertising expense paid)
Jul 30.	Cash					5500
	Deferred revenue						5500
	(Received cash from customers in advance)
Aug 1.	Cash					35000
	Notes payable						35000
	(Loan received)
Aug 4.	Equipment (Kayaks)					22100
	Cash						22100
	(Kayaks purchased)
Aug 10.	Cash					3200
	Deferred revenue					5500
	Service revenue (clinic)						8700
	(Services provided and cash received)
Aug 17.	Cash					12000
	Service revenue (Clinic)						12000
	(Services provided and cash received)
Aug 24.	Accounts payable					1900
	Cash						1900
	(Paid to supplier)
Sep 1.	Prepaid rent					4200
	Cash						4200
	(Rent paid for 1 year)

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