Great Adventures Problem 3-1

[The following information applies to the questionsdisplayed below.]
  
On July 1, 2018, Tony and Suzie organize their new company as acorporation, Great Adventures Inc. The following transactions occurfrom August 1 through December 31. Also, the balances are providedfor the month ended July 31.
  
The articles of incorporation state that the corporation will sell22,000 shares of common stock for $1 each. Each share of stockrepresents a unit of ownership. Tony and Suzie will act asco-presidents of the company. The following business activitiesoccur during July for Great Adventures.
  
Jul. 1 Sell $11,000 of common stock to Suzie.
Jul. 1 Sell $11,000 of common stock to Tony.
Jul. 1 Purchase a one-year insurance policy for $5,760 ($480 permonth) to cover injuries to participants during outdoorclinics.
Jul. 2 Pay legal fees of $1,800 associated withincorporation.
Jul. 4 Purchase office supplies of $2,000 on account.
Jul. 7 Pay for advertising of $320 to a local newspaper for anupcoming mountain biking clinic to be held on July 15. Attendeeswill be charged $50 the day of the clinic.
Jul. 8 Purchase 10 mountain bikes, paying $18,200 cash.
Jul. 15 On the day of the clinic, Great Adventures receives cash of$3,500 from 70 bikers. Tony conducts the mountain bikingclinic.
Jul. 22 Because of the success of the first mountain biking clinic,Tony holds another mountain biking clinic and the company receives$4,050.
Jul. 24 Pay for advertising of $800 to a local radio station for akayaking clinic to be held on August 10. Attendees can pay $140 inadvance or $190 on the day of the clinic.
Jul. 30 Great Adventures receives cash of $9,800 in advance from 70kayakers for the upcoming kayak clinic.
Aug. 1 Great Adventures obtains a $37,000 low-interest loan for thecompany from the city council, which has recently passed aninitiative encouraging business development related to outdooractivities. The loan is due in three years, and 6% annual interestis due each year on July 31.
Aug. 4 The company purchases 14 kayaks, paying $19,600 cash.
Aug. 10 Twenty additional kayakers pay $3,800 ($190 each), inaddition to the $9,800 that was paid in advance on July 30, on theday of the clinic. Tony conducts the first kayak clinic.
Aug. 17 Tony conducts a second kayak clinic, and the companyreceives $11,000 cash.
Aug. 24 Office supplies of $2,000 purchased on July 4 are paid infull.
Sep. 1 To provide better storage of mountain bikes and kayaks whennot in use, the company rents a storage shed, purchasing a one-yearrental policy for $4,080 ($340 per month).
Sep. 21 Tony conducts a rock-climbing clinic. The company receives$13,300 cash.
Oct. 17 Tony conducts an orienteering clinic. Participants practicehow to understand a topographical map, read an altimeter, use acompass, and orient through heavily wooded areas. The companyreceives $19,300 cash.
Dec. 1 Tony decides to hold the company’s first adventure race onDecember 15. Four-person teams will race from checkpoint tocheckpoint using a combination of mountain biking, kayaking,orienteering, trail running, and rock-climbing skills. The firstteam in each category to complete all checkpoints in order wins.The entry fee for each team is $510.Dec. 5 To help organize andpromote the race, Tony hires his college roommate, Victor. Victorwill 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$1,100 to purchase a permit from a state park where the race willbe held. The amount is recorded as a miscellaneous expense.Dec. 12The company purchases racing supplies for $2,500 on account due in30 days. Supplies include trophies for the top-finishing teams ineach category, promotional shirts, snack foods and drinks forparticipants, and field markers to prepare the racecourse.Dec. 15The company receives $20,400 cash from a total of forty teams, andthe race is held.Dec. 16 The company pays Victor’s salary of$1,200.
Dec. 31 The company pays a dividend of $3,700 ($1,850 to Tony and$1,850 to Suzie).
Dec. 31 Using his personal money, Tony purchases a diamond ring for$5,300. Tony surprises Suzie by proposing that they get married.Suzie accepts and they get married!

The following information relates to year-end adjusting entries asof December 31, 2018.
  
a. Depreciation of the mountain bikes purchased on July 8 andkayaks purchased on August 4 totals $7,900.
b. Six months’ worth of insurance has expired.
c. Four months’ worth of rent has expired.
d. Of the $2,000 of office supplies purchased on July 4, $330remains.
e. Interest expense on the $37,000 loan obtained from the citycouncil on August 1 should be recorded.
f. Of the $2,500 of racing supplies purchased on December 12, $210remains.
g. Suzie calculates that the company owes $14,300 in incometaxes.
  
Assume the following ending balances for the month of July.

	Balance
Cash	$	12,470
Prepaid insurance		5,760
Supplies (Office)		2,000
Equipment (Bikes)		18,200
Accounts payable		2,000
Deferred revenue		9,800
Common stock		22,000
Service revenue (Clinic)		7,550
Advertising expense		1,120
Legal fees expense		1,800

Required:
1. Record transactions from July 1 through December31.

2. Record adjusting entries as of December 31,2018.

4. Prepare an adjusted trial balance as ofDecember 31, 2018.

5-a. For the period July 1 to December 31,2018, prepare an income statement.

5-b. For the period July 1 to December 31,2018, prepare a statement of stockholders’ equity. All accountbalances on July 1 were zero.

5-c. Prepare a classified balance sheet as ofDecember 31, 2018.

6. Record closing entries as of December 31,2018.