Tia and Colton graduate from college in May 2018 and begindeveloping their new business. They begin by offering clinics forbasic outdoor activities such as mountain biking or kayaking. Upondeveloping a customer base, they’ll hold their first adventureraces. These races will involve four-person teams that race fromone checkpoint to the next using a combination of kayaking,mountain biking, orienteering, and trail running. In the long run,they plan to sell outdoor gear and develop a ropes course foroutdoor enthusiasts.

On July 1, 2018, Tia and Colton organize their new company as acorporation, Great Adventures Inc. The articles of incorporationstate that the corporation will sell 30,000 shares of common stockfor $1 each. Each share of stock represents a unit of ownership.Tia and Colton will act as co-presidents of the company. Thefollowing transactions occur from July 1 through December 31.

  

Jul.		1		Sell $15,000 of common stock to Colton.
Jul.		1		Sell $15,000 of common stock to Tia.
Jul.		1		Purchase a one-year insurance policy for $5,520 ($460 per month)to cover injuries to participants during outdoor clinics.
Jul.		2		Pay legal fees of $1,700 associated with incorporation.
Jul.		4		Purchase office supplies of $1,900 on account.
Jul.		7		Pay for advertising of $300 to a local newspaper for an upcomingmountain biking clinic to be held on July 15. Attendees will becharged $60 on the day of the clinic.
Jul.		8		Purchase 10 mountain bikes, paying $15,900 cash.
Jul.		15		On the day of the clinic, Great Adventures receives cash of$3,000 from 50 bikers. Tia conducts the mountain biking clinic.
Jul.		22		Because of the success of the first mountain biking clinic, Tiaholds another mountain biking clinic and the company receives$3,450.
Jul.		24		Pay for advertising of $710 to a local radio station for akayaking clinic to be held on August 10. Attendees can pay $110 inadvance or $160 on the day of the clinic.
Jul.		30		Great Adventures receives cash of $7,700 in advance from 70kayakers for the upcoming kayak clinic.

Aug.	1		Great Adventures obtains a $46,000 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 $18,200 cash.
Aug.	10		Twenty additional kayakers pay $3,200 ($160 each), in additionto the $7,700 that was paid in advance on July 30, on the day ofthe clinic. Tia conducts the first kayak clinic.
Aug.	17		Tia conducts a second kayak clinic, and the company receives$11,400 cash.
Aug.	24		Office supplies of $1,900 purchased on July 4 are paid infull.
Sep.	1		To provide better storage of mountain bikes and kayaks when notin use, the company rents a storage shed, purchasing a one-yearrental policy for $4,200 ($350 per month).
Sep.	21		Tia conducts a rock-climbing clinic. The company receives$14,400 cash.
Oct.	17		Tia conducts an orienteering clinic. Participants practice howto understand a topographical map, read an altimeter, use acompass, and orient through heavily wooded areas. The companyreceives $19,600 cash.
Dec.	1		Tia 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 $500.
Dec.	5		To help organize and promote the race, Tia hires her collegebuddy, Grocery Store Joe. Grocery Store Joe will be paid $50 insalary for each team that competes in the race. His salary will bepaid after the race.
Dec.	8		The company pays $1,700 to purchase a permit from a state parkwhere the race will be held. The amount is recorded as amiscellaneous expense.
Dec.	12		The company purchases racing supplies for $2,900 on account duein 30 days. Supplies include trophies for the top-finishing teamsin each category, promotional shirts, snack foods and drinks forparticipants, and field markers to prepare the racecourse.
Dec.	15		The company receives $20,000 cash from a total of forty teams,and the race is held.
Dec.	16		The company pays Joe’s salary of $2,000.
Dec.	31		The company pays a dividend of $3,000 ($1,500 to Tia and $1,500to Colton).
Dec.	31		Using his personal money, Tia purchases a diamond ring for$3,600. Tia surprises Colton by proposing that they get married.Colton accepts and they get married!

    

The following information relates to year-end adjusting entriesas of December 31, 2018.

1. Depreciation of the mountain bikes purchased on July 8 andkayaks purchased on August 4 totals $6,820.
2. Six months’ worth of insurance has expired.
3. Four months’ worth of rent has expired.
4. Of the $1,900 of office supplies purchased on July 4, $370remains.
5. Interest expense on the $46,000 loan obtained from the citycouncil on August 1 should be recorded.
6. Of the $2,900 of racing supplies purchased on December 12, $190remains.
7. Colton calculates that the company owes $13,200 in incometaxes.

REQUIREMENTS:

1. Record each of the transactions listed above in the‘General Journal’ tab (these are shown as items 1-27). From thosetransactions, populate the ‘General Ledger’ and review the ‘TrialBalance’ tab to see the effect of the transactions on the accountbalances.
2. Record the adjusting entries in the ‘General Journal’tab (these are shown as items 28-34). Update your ‘GeneralLedger’.
3. Review the adjusted ‘Trial Balance’ as of December 31,2018.
4. Prepare an income statement for the period endedDecember 31, 2018, in the ‘Income Statement’ tab.
5. Prepare a classified balance sheet as of December 31,2018, in the ‘Balance Sheet’ tab.
6. Record the closing entries in the ‘General Journal’ tab(these are shown as items 35-37). Update your ‘GeneralLedger’.