The following information applies to the questions displayed below, Tony and Suz

Question

The following information applies to the questions displayed below, Tony and Suzie graduate from college in May 2018 and begin developing their new business. They begin by offering clinics for basic outdoor activities such as mountain biking or kayaking. Upon developing a customer base, they'll hold their first adventure races. These races will involve four-person teams that race from one 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 for outdoor enthusiasts. On July 1, 2018, Tony and Suzie organize their new company as a corporation, Great Adventures Inc. The articles of incorporation state that the corporation will sell 23,000 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 business activities occur during July for Great Adventures. Jul. 1 Sell $11,500 of common stock to Suzie Jul. 1 Sell $11,500 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 $1,300 associated with incorporation. Jul. 4 Purchase office supplies of $1,400 on account. Jul. 7 Pay for advertising of $320 to a local newspaper for an upcoming mountain biking clinic to be held on July 15. Attendees will be charged $40 the day of the clinic. Jul. 8 Purchase 10 mountain bikes, paying $11,000 cash Jul. 15 On the day of the clinic, Great Adventures receives cash of $2,000 from 50 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 $2,400 Jul. 24 Pay for advertising of $880 to a local radio station for a kayaking clinic to be held on August 10. Attendees can pay $130 in advance or $180 on the day of the clinic. Jul. 30 Great Adventures receives cash of $6,500 in advance from 50 kayakers for the upcoming kayak clinic.

Explanation / Answer

Solution:

Cash Account Date Particulars Debit Date Particulars Credit 1-Jul-18 To common stock $11,500.00 1-Jul-18 By Prepaid Insurance $4,560.00 1-Jul-18 To common stock $11,500.00 1-Jul-18 By Legal Fees expense $1,300.00 15-Jul-18 To Service Revenue $2,000.00 7-Jul-18 By Advertising expense $320.00 22-Jul-18 To Service Revenue $2,400.00 8-Jul-18 By Equipment $11,000.00 30-Jul-18 To Deferred Revenue $6,500.00 24-Jul-18 By Advertising expense $880.00 31-Jul-18 By balance c/f $15,840.00 Total $33,900.00 Total $33,900.00

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