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.
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%
0 comments