Details: 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.
A. Explain the following:
o The elements of the balance sheet, their purposes, and how to measure them
o The elements and purpose of the statement of changes in stockholder's equity
B. Based on the adjusted trial balance and additional information, prepare the following in an Excel file to give to the controller for review:
o Balance sheet
o Income statement
o Statement of retained earnings
o 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:
o a decrease in accounts receivable of $300.
o a decrease in inventory of $450.
o an increase in accounts payable of $250.
o an decrease in accrued expenses of $100.
- Land was purchased in April for $3,500.
• Cash as of January 1, 2008 was $10,105.
The Flower Shoppe
Adjusted Trial Balance
December 31, 2008
DebitCredit
|
|
|
Cash
|
$22,750
|
|
|
Accounts Receivable
|
3,200
|
|
|
Inventory
|
8,000
|
|
|
Land
|
27,000
|
|
|
Building
|
56,000
|
|
|
Accumulated Depreciation
|
|
16,800
|
|
Accounts Payable
|
|
4,600
|
|
Accrued Expenses
|
|
2,500
|
|
Common Stock
|
|
20,000
|
|
Additional Paid-in Capital
|
|
10,000
|
|
Dividends
|
1,200
|
|
|
Retained Earnings
|
|
53,405
|
|
Sales
|
|
112,020
|
|
Returns
|
1,300
|
|
|
Purchases
|
47,000
|
|
|
Salaries
|
38,000
|
|
|
Supplies
|
870
|
|
|
Utilities
|
5,225
|
|
|
Telephone
|
2,850
|
|
|
Bank Charges
|
330
|
|
|
Depreciation Expense
|
5,600
|
|
|
$219,325
|
$219,325
|
Objective:
- Describe the three specific objectives of financial reporting, discuss the types of useful information for investment and credit decision making, explain the qualities of useful accounting information, the purposes, elements of the balance sheet and how to measure them.
- Classify the assets and liabilities of a balance sheet, explain the statement of changes in stockholders' equity, and describe the Security and Exchange Commission (SEC) integrated disclosures and the major components of an income statement, compute income from continuing operations, and report the results from discontinued operations.