Problem 3 (13.5 marks) (25 minutes)

Flowers Inc. has provided you with the following information about its transactions in February 2021:

1) Acquired new inventory on credit: $45,000.

2) Took out a 2-year loan for $200,000 on February 1. Annual interest is 5%, payable at the loan maturity date (February 1st, 2023).

3) Prepaid on February 1st the rent of February, March and April 2021: $4,000 per month.

4) Invested excess cash in shares of company CCC: 3,000 shares for $11 per share. The investment is classified as Fair Value Through Profit and Loss (FVTPL)

5) Received $16,000 cash in advance from a customer.

6) Based on a physical inventory count, it determined that the inventory left at the end of February amounts to $29,000. Inventory at the beginning of February was $35,000.

7) At the end of February, the shares of company CCC were trading at $13 per share.

8) Delivered 60% of the merchandise due to the customer in transaction 5.

9) The last pay in February is on Tuesday the 23rd for the 2 weeks ending on and including that day. It amounted to $20,000. Flowers Inc.s employees do not work the weekends. February has 28 days.

Required-

Prepare all the journal and adjusting entries required at the end of February 2021, assuming Flowers Inc. prepares monthly financial statements.

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