Mary Jo Barnes found it hard to believe that she had wrapped up her second year as owner and manager of The Garden Spot, a small garden shop she had opened on January 1 of the prior year in Charlottesville, Virginia. She thought things had been going well at The Garden Spot and was excited about what the future might hold. Before retiring for the evening, Barnes needed to prepare the financial statements for her second year of operation. A lot had happened during the year, and she wanted to make sure she captured it all accurately in preparing those financial statements. After all, she would use those financial statements to assess the financial performance of her company during the year, as well as to take stock of its financial position at the end of the year. She knew that those financial statements would be important to loan officers at National Bank, where the company had obtained two loans, and to Jake Lawrence, who had made an equity investment in the company early during its second year in operation. Barnes began to go through her notes, receipts, and other documents, and compiled the following list of events that had occurred during the year 1. Early in the year, as she had contemplated the future growth of the company, she realized that she would need some additional financing. She recalled the enthusiasm of her former colleague Lawrence when she told him two years ago that she was starting The Garden Spot. He had expressed interest in investing in the company at that point, but Barnes had preferred that she and her husband, Josh, be the sole investors. But with the future growth prospects of the company, Barnes had reached out to Lawrence, and he had invested $20,000 in the company in exchange for shares of common stock. 2. During the first year, Barnes had been operating the business on that pan of the property where she and Josh lived. When it became apparent that the company needed more space, the company purchased a parcel of land adjacent to their property on July 1 for $100,000. The company financed the purchase with a $90,000 loan from National Bank and paid the remaining $10,000 with cash. The loan was to be repaid in equal principal payments over 10 years. The interest rate was 8%, and interest was payable at the end of each year when the principal payment was made.