It is the end of a reporting period. Because there are more people than usual retiring this year, your manager has asked your accounting department to create 2 things:
A process documentation detailing the different methods of preparing income statements, specific sections of the income statement, and how to handle the special types of income statement items
Basic financial statements for your company
Individual Portion:
Visit the SEC’s Web site (http://idea.sec.gov/idea/searchidea/companysearch_idea.html).
Select a company filing of your choice that contains a multiple-step income statement.
Communicate your selection with your group (each of you should submit a different company).
Submit the link to this filing as proof of your research.
Prepare a process documentation that
is prepared in a professional manner because it will be the desktop guide used by others in the event of your absence to prepare the financial statements for Music Warehouse.
is in the form of a memorandum or as a numbered listing of items, depending on your individual preference.
includes the following elements:
a definition and description of the specific sections of the income statement
a description of the different methods of preparing income statements
an explanation of the conceptual guidelines for reporting income
how to handle the special types of income statement items
Please add your file.
Your assignment will be graded in accordance with the following criteria. Click here to view the grading rubric.
Group Portion:
Using the information below, do the following:
Prepare a multiple-step income statement for Music Warehouse.
Prepare a statement of changes in stockholder’s equity for Music Warehouse.
You may work together, or you may assign each group member a different financial statement or part of the assignment to work on.
Music Warehouse
Adjusted Trial Balance
December 31, 2008
Debit
Credit
Cash
$24,675
Accounts Receivable
5,625
Inventory
65,980
Land
93,000
Building
289,000
Accumulated Depreciation
75,000
Notes Payable
85,000
Accounts Payable
53,600
Interest Payable
4,750
Common Stock
10,000
Additional Paid-in Capital
120,000
Dividends
10,000
Retained Earnings
59,980
Sales
937,500
Sales Discounts
22,675
Cost of Goods Sold
723,000
Salaries
81,000
Utilities
8,900
Repairs & Maintenance
5,225
Telephone
2,850
Interest Expense
4,400
Depreciation Expense
9,500
$1,345,830
$1,345,830
The following is additional information needed for financial-statement preparation:
Loss as a result of hurricane damage on the building: $17,000 (assume that the building is not located in an area that sustains frequent hurricane damage.)
Loss because of the discontinuation of the cassette tape music segment: $26,875
Beginning of the year balance of common stock: $8,000 (assume that changes are related to issuance of common stock.)
Beginning of the year balance of additional paid-in capital: $102,000
Effective income tax rate: 35%
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