Additional Perspective 3-1 (continued)
Requirement 1 (concluded)
Dec. 8, 2015
Miscellaneous Expense 1,200
Dec. 12, 2015
Supplies (Racing) 2,800
Dec. 15, 2015
Cash 20,000
Dec. 16, 2015
Salaries Expense 2,000
Dec. 31, 2015
Dividend 4,000
Additional Perspective 3-1 (continued)
Requirement 2
Dec. 31, 2015 Debit Credit
Depreciation Expense 8,000
Dec. 31, 2015
Insurance Expense 2,400
Dec. 31, 2015
Rent Expense 800
Dec. 31, 2015
Supplies Expense (Office) 1,500
Dec. 31, 2015
Interest Expense 750
Dec. 31, 2015
Supplies Expense (Racing) 2,600
Dec. 31, 2015
Income Tax Expense 14,000
Additional Perspective 3-1 (continued)
Requirement 3 (Note: adjusting entries in italics)
Cash
10,000
10,000
2,000
2,300
4,000
4,800
1,500
300
12,000
700
Additional Perspective 3-1 (continued)
Requirement 4
Great Adventures, Inc.
Adjusted Trial Balance
December 31, 2015
Accounts Debit Credit
Cash $ 64,200
Prepaid Insurance 2,400
Prepaid Rent 1,600
Supplies (Office) 300
Supplies (Racing) 200
Equipment (Bikes) 12,000
Equipment (Kayaks) 28,000
Additional Perspective 3-1 (continued)
Requirement 5
Great Adventures, Inc.
Income Statement
For the period ended December 31, 2015
Revenues:
Service revenue (clinic) $52,900
Service revenue (racing) 20,000
Total revenues $72,900
Expenses:
Advertising expense 1,000
Depreciation expense 8,000
Income tax expense 14,000
Insurance expense 2,400
Great Adventures, Inc.
Statement of Stockholders’ Equity
For the period ended December 31, 2015
Common
Stock
Retained
Earnings
Total
Stockholders’
Equity
Balance at July 1 $ 0 $ 0 $ 0
Issuance of common stock 20,000 20,000
Add: Net income for 2015 37,150 37,150
Less: Dividends (4,000) (4,000)
Additional Perspective 3-1 (continued)
Requirement 5 (concluded)
Great Adventures, Inc.
Balance Sheet
December 31, 2015
Assets Liabilities
Cash $ 64,200 Accounts payable $ 2,800
Prepaid insurance 2,400 Interest payable 750
Prepaid rent 1,600 Income tax payable 14,000
Supplies (office) 300 Total current liabilities 17,550
Stockholders’ Equity
Equipment (bikes) 12,000 Common stock 20,000
Equipment (kayaks) 28,000 Retained earnings 33,150
Additional Perspective 3-1 (continued)
Requirement 6
Dec. 31, 2015 Debit Credit
Service Revenue (Clinic) 52,900
Service Revenue (Racing) 20,000
Dec. 31, 2015
Retained Earnings 35,750
Advertising Expense 1,000
Depreciation Expense 8,000
Income Tax Expense 14,000
Insurance Expense 2,400
Interest Expense 750
Legal Fees Expense 1,500
Dec. 31, 2015
Retained Earnings 4,000
Additional Perspective 3-1 (continued)
Requirement 7 (Note: closing entries in italics)
Cash
10,000
10,000
2,000
2,300
4,000
4,800
1,500
300
12,000
700
Additional Perspective 3-1 (concluded)
Requirement 8
Great Adventures, Inc.
Post-closing Trial Balance
December 31, 2015
Accounts Debit Credit
Cash $ 64,200
Prepaid Insurance 2,400
Prepaid Rent 1,600
Supplies (Office) 300
Supplies (Racing) 200
Equipment (Bikes) 12,000
Equipment (Kayaks) 28,000
Additional Perspective 3-2
Requirement 1
Current assets equal $1,141,800 thousand. Current assets include cash and cash
equivalents, short-term investments, merchandise inventory, accounts receivable,
Requirement 2
Current liabilities equal $435,902 thousand. Current liabilities include accounts
payable, note payable, accrued compensation and payroll taxes, accrued rent,
Requirement 3
Prepaid expenses and accrued liabilities likely relate to adjusting entries.
Requirement 4
The change in retained earnings is -$238,406 thousand (= $1,533,058 −
$1,771,464).
Requirement 5
The amount of net income is $232,108 thousand.
Requirement 6
The change in retained earnings represents net income for the year less dividends. If the
change in retained earnings is -$238,406 thousand and net income equals $232,108