puja
fgoez1It 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%
12 years ago
30
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