Question 2. 13.5 marks (approx 24 minutes) Enter your answer below Ella Co. is a gym which was incorporated on January 2, 2020. The following transactions happened during the year ended December 31, 2020. 1 On January 2nd, the owner invested $250,000 to start the gym. 2 On January 2nd, Ella signed a two-year lease contract to rent a building which will be used as the main facility. The first month rent of $1,000 was paid in advance on Jan 2. 3 On February 28, Ella borrowed $120,000 from a local bank. The loas is a 3-year with 5% interest rate. The interest is payable on the first day of each month, beginning April 1st. 4 On March 1, Ella purchased equipment at a cost of $55,000 on account. The equipment has a useful life of 10 years and $1,000 residual value. 5 On March 31, Ella collected $70,000 membership fees from its customers. The membership fees cover a full year. 6 The following expenses were paid during the year. Salaries and wages expense Rent expense Interest expense 78,000 11,000 4,500 7 On May 1, Ella purchased a two-year insurance policy at a cost of $3,600 which takes effect on May 1. 8 On September 1st, Ella invested in 10,000 common shares of Ava Inc. The shares are classified as FVTOCI investments. The common shares of Ava were traded at $9 per share on September 1, 2020. The shares are traded at $15 per share on December 31 2020. Required: Prepare journal entries to record the above transactions. For each entry, write the initial entry and then, if necessary, write an adjusting entry at December 31, 2020.