Accounting transactions and financial statements 

Bloom Field is a small business selling a variety of orchids and roses. The balance sheet at the end of December 2019 is shown below.

Bloom Field is a small business selling a variety of orchids and roses. The balance sheet at the end of December 2019 is shown below.

Bloom Field – Balance Sheet as of 31 December 2019

Assets		Liabilities & Owner’s Equity
Current Assets:		Current Liabilities:
Cash	$38,000	Accounts Payable	$12,100
Accounts Receivable	$14,000
Inventory	$15,000
Non-current Assets:		Non-current Liabilities:
Computers – Cost	$6,000	Bank Loan	$20,000
Less Accumulated Depreciation	($1,900)
Computers – Net	$4,100	Owner’s Equity:
		Share Capital	$30,000
		Retained Earnings	$9,000
Total Assets	$71,100	Total Liab’ & OE	$ 71,100

  
 
 
 
 

  
 

 
 
 

(a) Transactions for January 2020 are given below (ignore taxes). Prepare journal entries to account for these transactions, and indicate the impact on the Cash Flow Statement if there is any. The first transaction is done for you in the template as an example. < (1) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (xi) (xii) 1 January, collected $5,000 cash from accounts receivable. < 1 January, prepaid rent $18,000 for the next 12 months. 1 January, sold one computer for $400 cash. The disposed computer has a cost of $2,000 and accumulated depreciation of $1,400. < 2 January, borrowed $25,000 from the bank, to be repaid 3 years later. 5 January, paid $6,000 of accounts payable, which related to inventory purchased in 2019. 7 January, sold $8,000 worth of inventory for $15,000 cash. 8 January, purchased $12,000 of inventory on credit, which is payable in February 2020. 20 January, paid employee monthly salary of $2,000. < 22 January, a customer ordered some special orchids and paid a deposit of $500. The delivery of the order will take place in March 2020. < 28 January, paid other expenses $700 including power, water, internet and phone, for the month. < 29 January, sold $10,000 worth of inventory for $19,000 on credit, receivable in February 2020. 31 January, the following adjustments needed to be recorded: < . (24 marks) . Accrued interest expense $300 for the month of January. Depreciation expense $100 for the computers in January. Rental expense for the month of January.