At the end of 2022, the following information is available for Great Adventures.

• Additional interest for five months needs to be accrued on the $30,000, 6% loan obtained on August 1, 2021. Recall that annual interest is paid each July 31.
• Assume that $10,000 of the $30,000 loan discussed above is due next year.
• By the end of the year, $20,000 in gift cards have been redeemed. The company had sold gift cards of $25,000 during the year and recorded those as Deferred Revenue.
• Great Adventures is a defendant in litigation involving a biking accident during one of its adventure races. The company believes the likelihood of payment occurring is probable, and the estimated amount to be paid is $12,000.
• For sales of MU watches, Great Adventures offers a warranty against defect for one year. At the end of the year, the company estimates future warranty costs to be $4,000.

1. Prepare the journal entries for transactions. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

-Record the accrued interest on note

- Record the reclassified portion of long-term debt as current

-Record the redeemed of gift cards

- Record the loss of contingent liability

- Record the estimated future warranty costs

- Record entry to close the revenue accounts

- Record entry to close the expense accounts

2. Prepare an income statement for the period ended December 31, 2022. Choose the appropriate accounts to complete the company's income statement. The unadjusted, adjusted, or post-closing balances will appear for each account, based on your selection.

3. Prepare a classified balance sheet as of December 31, 2022. Choose the appropriate accounts to complete the company's balance sheet. The unadjusted, adjusted, or post-closing balances will appear for each account, based on your selection.

  
 

Transcribed Image Text:

Account Title Debit Credit Cash $ 89,070 Accounts Receivable 50,000 Allowance for Uncollectible Accounts 2,400 Inventory 7,000 Prepaid Insurance 900 Equipment 62,000 Accumulated Depreciation 25,250 Accounts Payable 20,800 Income Tax Payable 14,500 Deferred Revenue 25,000 Notes Payable (Long-term) 30,000 Common Stock 20,000 Retained Earnings 33,450 Service Revenue 44,500 ASales Revenue 100,000 Sales Discounts 350 Interest Revenue 120 Cost of Goods Sold 38,500 Depreciation Expense 17,250 Supplies Expense 500 Salaries Expense 24,000 Bad Debt Expense 2,400 AInterest Expense 1,050 Rent Expense 2,400 Income Tax Expense 14,500 Insurance Expense 5,700 Repairs and Maintenance Expense 400 Total $ 316,020 $ 316,020 Account Title Debit Credit Cash $ 89,070 Accounts Receivable 50,000 Allowance for Uncollectible Accounts 2,400 Inventory 7,000 Prepaid Insurance 900 Equipment 62,000 Accumulated Depreciation 25,250 Accounts Payable 20,800 Income Tax Payable 14,500 Deferred Revenue 25,000 Notes Payable (Long-term) 30,000 Common Stock 20,000 Retained Earnings 33,450 Service Revenue 44,500 ASales Revenue 100,000 Sales Discounts 350 Interest Revenue 120 Cost of Goods Sold 38,500 Depreciation Expense 17,250 Supplies Expense 500 Salaries Expense 24,000 Bad Debt Expense 2,400 AInterest Expense 1,050 Rent Expense 2,400 Income Tax Expense 14,500 Insurance Expense 5,700 Repairs and Maintenance Expense 400 Total $ 316,020 $ 316,020

Answer rating: 100% (QA)

Part 1 Sno Journal Entries Debit Credit 1 Accrued Interest Expenses 750 Accrued Interest Payable 750 Record Accrued Interest on Note 2 No Journal Entr... View the full answer