The Garden Spot: Year One

Abstract

The owner and manager of a small garden shop that opened on January 1 needs to analyze and record transactions, prepare financial statements, and assess the company's performance during its first year of operations. She also needs to provide a set of financial statements for her bank, as she is required to do annually based on her loan agreement. Students will prepare journal entries, post this information to T-accounts, record the necessary adjusting entries and post to T-accounts, prepare an income statement that summarizes results of operations for the year, and prepare a balance sheet as of December 31. Excerpt UVA-C-2378 Rev. Aug. 16, 2016 The Garden Spot: Year One It was almost midnight on December 31, and Mary Jo Barnes was reflecting on her first year as owner and manager of The Garden Spot, a small garden shop she had opened on January 1 in Charlottesville, Virginia. She and her husband, Josh, had both worked in a large city in the northeastern United States for the past 10years and had decided to relocate to Charlottesville to establish a different lifestyle. Barnes had a degree in horticulture and wanted to devote her working days to something she enjoyed and was passionate about. So she decided to start her own business and opened a small retail garden shop selling plants, trees, shrubs, and flowers. Barnes recalled what a busy day she had on that first day in January: 1. She had met with her lawyer to incorporate the business, and she and Josh invested $ 60,000 in the company in exchange for shares of common stock. They had contemplated borrowing the $ 60,000 from Barnes's parents but had decided instead to use some of the money they had saved over the past 10 years. . . .