The following transactions occur over the remainder of the year. Aug. 1 Suzie ap
ID: 2384613 • Letter: T
Question
The following transactions occur over the remainder of the year.
Aug. 1 Suzie applies for and obtains a $47,000 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 $20,800.
Aug. 10 Twenty additional kayakers pay $3,600 ($180 each), in addition to the $5,200 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 receives $10,900 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 $3,000 ($250 per month).
Sep. 21 Tony conducts a rock-climbing clinic. The company receives $14,900 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 $19,500.
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 $600.
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 $1,200 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 $2,700 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 $24,000 to race. The race is held.
Dec. 16 The company pays Victor’s salary of $2,400.
Dec. 31 The company pays a dividend of $4,600 ($2,300 to Tony and $2,300 to Suzie).
Dec. 31 Using his personal money, Tony purchases a diamond ring for $4,200. Tony surprises Suzie by proposing that they get married. Suzie accepts!
The following information relates to year-end adjusting entries as of December 31, 2012.
a. Depreciation of the mountain bikes purchased on July 8 and kayaks purchased on August 4 totals $8,600.
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, $320 remains.
e. Interest expense on the $47,000 loan obtained from the city council on August 1 should be recorded.
f. Of the $2,700 of racing supplies purchased on December 12, $270 remains.
g. Suzie calculates that the company owes $13,600 in income taxes.
Assume the following ending balances for the month of July.
Balance
Cash $ 9,030
Prepaid insurance 5,640
Supplies (Office) 1,800
Equipment (Bikes) 11,000
Accounts payable 1,800
Unearned revenue 5,200
Common stock 20,000
Service revenue (Clinic) 3,600
Advertising expense 1,230
Legal fees expense 1,900
Record transactions from August 1 through December 31
Aug.1, 2012
Aug.4, 2012
Aug.10, 2012
Aug.17, 2012
Aug.24, 2012
Sep.1, 2012
Sep.21, 2012
Oct.17, 2012
Dec.1, 2012
Dec.5, 2012
Dec.8, 2012
Dec.12, 2012
Dec.15, 2012
Dec.16, 2012
Dec.31, 2012
Dec.31, 2012
Record adjusting entries as of December 31, 2012.
a.
b.
c.
d.
e.
f.
g.
Post transactions from August 1 through December 31 and adjusting entries on December 31 to T-accounts.
Cash
Beg. Bal.
Aug. 1 Aug. 4
Aug. 10 Aug. 24
Aug. 17 Sep. 1
Sep. 21 Dec. 8
Oct. 17 Dec. 16
Dec. 15 Dec. 31
End.bal
Prepaid Insurance
Beg. Bal. Dec. 31
End.bal
Prepaid Rent
Sep. 1 Dec. 31
End.bal
Supplies (Office)
Beg. Bal. Dec. 31
End.bal
Supplies (Racing)
Dec. 12 Dec. 31
End.bal
Equipment (Bikes)
Beg. Bal.
End.bal
Equipment (Kayaks)
Aug. 4
End.bal
Accumulated Depreciation
Dec. 31
End.bal
Accounts Payable
Aug. 24 Beg. Bal.
Dec. 12
End.bal
Unearned Revenue
Aug. 10 Beg. Bal.
End.bal
Interest Payable
Dec. 31
End.bal
Income Tax Payable
Dec. 31
End.bal
Notes Payable
Aug. 1
End.bal
Common Stock
Beg. Bal.
End.bal
Dividends
Dec. 31
End.bal
Service Revenue (Clinic)
Beg. Bal.
Aug. 10
Aug. 17
Sep. 21
Oct. 17
End.bal
Service Revenue (Racing)
Dec. 15
End.bal
Advertising Expense
Beg. Bal.
End.bal
Legal Fees expense
Beg. Bal.
End.bal
Miscellaneous Expense
Dec. 8
End.bal
Salaries Expense
Dec. 16
End.bal
Depreciation Expense
Dec. 31
End.bal
Insurance Expense
Dec. 31
End.bal
Rent Expense
Dec. 31
End.bal
Supplies Expense (Office)
Dec. 31
End.bal
Supplies Expense (Racing)
Dec. 31
End.bal
Interest Expense
Dec. 31
End.bal
Income Tax Expense
Dec. 31
End.bal
Prepare an adjusted trial balance as of December 31, 2012.
For the period July 1 to December 31, 2012, prepare an income statement
Revenues:
$
Total revenues
For the period July 1 to December 31, 2012, prepare an statement of stockholders’ equity. All account balances on July 1 were zero.
Prepare a classified balance sheet as of December 31, 2012.
Record closing entries as of December 31, 2012.
Post the closing entries of retained earnings to the T-accounts
Prepare a post-closing trial balance as of December 31, 2012.
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