Record Transactions From August 1 Through December 31, 2012

Record transactions from August 1 through December 31, 2012, and

The following transactions occur over the remainder of the year. Aug. 1 Suzie applies for and obtains a $40,000 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 $18,700. Aug. 10 Twenty additional kayakers pay $3,600 ($180 each), in addition to the $9,100 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 $12,300 cash. Aug. 24 Office supplies of $1,300 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 $3,360 ($280 per month). Sep. 21 Tony conducts a rock-climbing clinic. The company receives $13,400 cash. Oct. 17 Tony conducts an orienteering clinic. Participants practice understanding topographical maps, reading altimeters, using compasses, and orienting through heavily wooded areas. Clinic fees total $19,300. Dec. 1 Tony decides to hold the company’s first adventure race on December 15. Four-person teams will race using mountain biking, kayaking, orienteering, trail running, and rock-climbing skills. Entry fee per team is $570. Dec. 5 To organize and promote the race, Tony hires Victor, who will be paid $70 per team after the race. Dec. 8 The company pays $2,000 for a race permit from a state park. Dec. 12 The company purchases racing supplies for $2,300 on account. Dec. 15 Forty teams pay a total of $22,800, and the race is held. Dec. 16 The company pays Victor’s salary of $2,800. Dec. 31 The company pays a dividend of $4,500. Tony purchases a diamond ring for $4,300, and Suzie accepts his proposal. Year-end adjusting entries include depreciation, accruals for insurance, rent, supplies, interest, supplies remaining, taxes, etc. Using balances from July, record transactions, adjustments, posting to T-accounts, preparing financial statements, closing entries, and a post-closing trial balance.

Paper For Above instruction

The financial activities of a company over a fiscal year are essential to understanding its fiscal health and operational efficiency. This paper chronicles the series of transactions that took place from August 1 through December 31, 2012, for a company engaged in outdoor adventure activities, detailing the accounting entries, adjustments, and preparation of financial statements to ensure accurate reporting and compliance with accounting principles.

On August 1, the company secured a $40,000 low-interest loan from the city council aimed at promoting outdoor recreation businesses. This transaction created a liability account, "Notes Payable," and an asset account, "Cash," reflecting the increased liquidity. The loan accrues 6% annual interest payable each July 31, which necessitates recording interest expense periodically.

Subsequently, the company invested in durable equipment and supplies critical for its operations. On August 4, the purchase of 14 kayaks for $18,700 increased the kayak equipment asset account. The expenditure was capitalized, considering the kayaks' useful life and depreciation. On the same day, the company received funds for kayaking clinics from customers, with $9,100 paid in advance (unearned revenue) and additional income of $3,600 received during the clinic, totaling income recognition aligned with service provision.

The transactions also involved settling supplier bills; for example, payment of $1,300 for office supplies purchased on July 4 ensures the supplies expense is accurately reported for the period. Moving into September, the company purchased a one-year rental policy for $3,360, which is initially recorded as prepaid rent and subjected to monthly amortization—$280 per month—matching the rental expense with the period it benefits.

Customer activity continued into the fall, with Tony conducting various clinics. The shop received $13,400 cash from the rock-climbing clinic on September 21 and $19,300 from the orienteering clinic on October 17. These cash inflows are recorded as service revenue. On December 1, the company decided to hold a large adventure race, with forty teams each paying $570 — total revenue of $22,800. Expenses related to the race include permits ($2,000), supplies ($2,300), and staff salaries for Victor ($2,800).

Adjustments at year-end are crucial for ensuring the financial statements' accuracy. Depreciation of mountain bikes and kayaks totaling $8,400 accounts for equipment wear and tear. Insurance paid on July 4 covers six months, with four months' expense recognized. Rent paid on September 1, $3,360, accounts for four months' expense as of December 31. Office supplies initially costing $1,300 have $250 remaining, reflecting supplies used during the period. The interest expense on the loan of $40,000 at 6% annually amounts to $2,400, which needs recording for the period. Additionally, supplies purchased on December 12 for $2,300 are partially used, with $180 remaining.

Income tax expense estimated at $14,500 is accrued to match taxable income. Subsequently, all transactions, including adjustments, are posted to T-accounts to prepare an unadjusted trial balance. It is essential for the balances to reflect the company's financial position accurately.

From the trial balance, financial statements are prepared, including the income statement showing revenues and expenses, the statement of stockholders’ equity indicating changes in equity accounts, and the classified balance sheet highlighting assets, liabilities, and equity as of December 31, 2012. Closing entries are then recorded to transfer temporary account balances to retained earnings, and a post-closing trial balance is prepared to confirm the correctness of accounts for the new fiscal period.

In conclusion, this comprehensive accounting process from August through December 2012 demonstrates the meticulous recordings, adjustments, and statement preparations necessary for accurate financial reporting. Such practices ensure transparency, compliance, and insightful financial analysis for stakeholders.

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