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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 itemsBasic 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 thatis 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 statementa description of the different methods of preparing income statementsan explanation of the conceptual guidelines for reporting incomehow to handle the special types of income statement items

Please add your file.

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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

CreditCash

$24,675

Accounts Receivable

5,625

Inventory

65,980

Land

93,000

Building

289,000

Accumulated Depreciation

75,000Notes Payable

85,000Accounts Payable

53,600Interest Payable

4,750Common Stock

10,000Additional Paid-in Capital

120,000Dividends

10,000

Retained Earnings

59,980Sales

937,500Sales 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: $26,875Beginning 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: $102,000Effective income tax rate: 35%

 

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