Great Adventures Problem 3-1 [The following information applies to the questions

Question

Great Adventures Problem 3-1 [The following information applies to the questions displayed below. The following transactions occur over the remainder of the year. Great Adventures obtains a $38,000 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. The company purchases 14 kayaks, costing $19,600. Aug. 1 4 Aug. Aug. 10 Twenty additional kayakers pay $3,200 ($160 each), in addition to the $7,700 that was paid in advance on July 30, on the day of the clinic. Tony conducts the first kayak clinic. Tony conducts a second kayak clinic, and the company receives $10,500 cash. Office supplies of $1,600 purchased on July 4 are paid in full. 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 $3,120 ($260 per month). 17 Aug. Aug. 24 Sep. 1 Sep. 21 Tony conducts a rock-climbing clinic. The company receives $14,000 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 $19,60o. 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 $500. Dec. 1

Explanation / Answer

Income statement Decmber 31,2015 Revenue: $ Service Revenue 80950 5950+14000+19600+3200+7700+10500+20000=80950 Expenses Office Supplies Expense 1370 Racing supplies Expenses 1710 Advertising Expenses 960 Legal fees expense 1600 Interest 6% for 5 months 950 Rent Expense $260*4 1040 Misecceleneous Expenses 1500 Salary Expense 1200 Depreciation 7900 Insurance expense 6 months 2760 Total Expense 20990 Income before Taxes 59960 Income taxes 14400 Net Income $45560

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