The owner and manager of a small garden shop needs to prepare the financial statements for the shop's second year of operation. These financial statements will assess the financial performance of her company during the year, as well as take stock of its financial position at the end of the year and will be important to loan officers at her bank where the company had obtained two loans, and to an equity investor in the company. Students will prepare journal entries, post this information to T-accounts, record the necessary adjusting entries and post to T-accounts, and prepare an income statement that summarizes results of operations for the year.