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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.

  1. 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
  1. 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.
  • a 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




 Accounts Receivable3,200




 Accumulated Depreciation 


Accounts Payable 4,600

Accrued Expenses 2,500

Common Stock 20,000

Additional Paid-in Capital 10,000



Retained Earnings 53,405

Sales 112,020













Bank Charges330


Depreciation Expense5,600




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