Tony and Suzie have purchased land for a new camp. Now they need money to build the

Question:

Tony and Suzie have purchased land for a new camp. Now they need money to build the cabins, dining facility, a ropes course, and an outdoor swimming pool. Tony and Suzie first checked with Summit Bank to see if they could borrow an additional $1 million, but unfortunately the bank turned them down as too risky. Undeterred, they promoted their idea to close friends they had made through the outdoor clinics and TEAM events. They decided to go ahead and sell shares of stock in the company to raise the additional funds for the camp.

Great Adventures has authorized $1 par value common stock. When the company began on July 1, 2021, Tony and Suzie each purchased 10,000 shares (20,000 shares total) of $1 par value common stock at $1 per share. The following transactions affect stockholders’ equity during the remainder of 2022:

November 5 Issue an additional 100,000 shares of common stock for $10 per share.

November 16 Purchase 10,000 shares of its own common stock (i.e., treasury stock) for $15 per share.

November 24 Resell 4,000 shares of treasury stock at $16 per share.

December 1 Declare a cash dividend on its common stock of $11,400 ($0.10 per share) to all stockholders of record on December 15.

December 20 Pay the cash dividend declared on December 1.

December 31 Pay $800,000 for construction of new cabins and other facilities. The entire expenditure is recorded in the Buildings account.

Required:

1. Record each of these transactions.

2. Great Adventures has net income of $35,835 in 2022. Retained earnings at the beginning of 2022 was $33,450. Prepare the stockholders’ equity section of the balance sheet for Great Adventures as of December 31, 2022.

The Great Adventures continuing problem also can be assigned using the General Ledger software in Connect. Students will be given an existing trial balance and asked to prepare:

(1) The journal entries for the transactions above in 2022,

(2) Financial statements,

(3) Closing entries.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...

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