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.