You are an accountant for The Flower Shoppe. Your supervisor has asked you to help her prepare the year-end financial statements. Before you do, she wants to ensure that you understand some main points.
- Explain the following:
- The elements of the balance sheet, their purposes, and how to measure them
- The elements and purpose of the statement of changes in stockholder's equity
- Based on the adjusted trial balance and additional information, prepare the following in an Excel file to give to the controller for review:
- Balance sheet
- Income statement
- Statement of retained earnings
- Statement of cash flows
The following is additional information about the Flower Shoppe that is needed for financial-statement preparation:
- Net income for the year ended December 31, 2008 was $10,845.
- Changes from the prior year's balances included the following:
- a decrease in accounts receivable of $300.
- a decrease in inventory of $450.
- an increase in accounts payable of $250.
- an decrease in accrued expenses of $100.
- Land was purchased in April for $3,500.
Cash as of January 1, 2008 was $10,105.
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The Flower Shoppe
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Adjusted Trial Balance
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December 31, 2008
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DebitCredit
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Cash
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$22,750
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Accounts Receivable
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3,200
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Inventory
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8,000
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Land
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27,000
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Building
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56,000
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Accumulated Depreciation
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16,800
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Accounts Payable
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4,600
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Accrued Expenses
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2,500
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Common Stock
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20,000
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Additional Paid-in Capital
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10,000
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Dividends
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1,200
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Retained Earnings
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53,405
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Sales
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112,020
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Returns
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1,300
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Purchases
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47,000
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Salaries
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38,000
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Supplies
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870
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Utilities
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5,225
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Telephone
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2,850
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Bank Charges
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330
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Depreciation Expense
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5,600
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$219,325
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$219,325
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