1. Refer to Problem 2-41B (below). Use an Excel spreadsheet to construct the required financial statements. To complete Requirement b, use formulas where normal arithmetic calculations are made within the financial statements (in particular the statement of changes in stockholders equity).

The following accounts and balances were drawn from the records of Shearer Company at December 31, Year 2:

Cash	$22,100	Accounts receivable	$21,000
Land	43,000	Cash flow from operating act.	8,600
Insurance expense	2,500	Beginning retained earnings	47,200
Dividends	5,000	Beginning common stock	5,500
Prepaid insurance	3,500	Service revenue	86,000
Accounts payable	15,000	Cash flow from financing act.	9,000
Supplies	2,100	Ending common stock	14,500
Supplies expense	1,000	Cash flow from investing act.	(6,000)
Rent expense	3,500	Other operating expenses	59,000

Required

Use the accounts and balances from Shearer Company to construct an income statement, statement of changes in stockholders equity, balance sheet, and statement of cash flows (show only totals for each activity on the statement of cash flows).

2. It is interesting to speculate about what would happen if certain operating results change for better or worse. After completing Requirement a, change certain account balances for each of the following independent operating adjustments. After each adjustment, notice how the financial statements would differ if the change in operations were to occur. After noting the effect of each adjustment, return the data to the original amounts in Problem 2-41A and then go to the next operating adjustment. At the end, return all numbers to the original balances noted above.

Input the following table into the bottom of your excel worksheet, calculate the new amounts on the financial statements for the various operating changes listed:

Original	1	2	3	4	5
Net income
Total assets
Total liabilities
Total stockholders equity
Total liabilities & stockholders equity

Independent Operating Adjustments

1. Revenue and the related Accounts Receivable increased $10,000.
2. Revenue and the related Accounts Receivable decreased $10,000.
3. Operating Expenses and the related Accounts Payable decreased $400.
4. Operating Expenses and the related Accounts Payable increased $400.
5. Dividends paid decreased $500 and cash changed accordingly.