Hi Shiru,

Can you please help me with this problem?

I answered part 1 and most of part 2. Please review my work thus far and help me with the problem. I attached one page with the problem and one page with my work.

Thank you.

For part 1, I already did the research from Yahoo Finance for the first part and chose Apple as the company that I believe shows a multi-step income statement and here is the link you so you can view and please let me know if this is true: http://finance.yahoo.com/quote/AAPL/financials?p=AAPL For part 2, definition and description of the specific sections of the income statement: RETRIEVED FROM: http://smallbusiness.chron.com/three-important-parts-income-statement-57974.html \"The three most important parts of the income statement are: 1. Gross Profit 2. Operating Expenses 3. Net Earnings The gross profits section shows revenues and to get the gross profit you subtract sales revenue minus the cost of goods sold. The operating expenses show how much it costs to run the business operations such as: Salary expense Benefits expense Advertising expense Rent expense Utilities expense Depreciation expense The net earnings show whether the business gained a profit or a loss for a specific period. Describe the different methods of preparing income statements. There two different methods in preparing an income statement. The first method is known as the single-step method and the second method is known as the multi-step income statement. The singlestep method income statement has just one step in obtaining the net income and this is by subtracting total expense from total revenues. According to Investopedia, when a company uses the single-step method, it is a simpler format than the multi-step method; however, it does not breakdown the operating expenses and if an investor is looking at the net earnings, it could be incorrect. The multi-step method income statement shows many steps in obtaining the net income. It gives three figures that are gross profit, operating profits and net profits. These figures are possible because this statement gives the breakdown of revenues, expenses, operating revenues and expenses as well as the non-operating revenues and expenses. For the most part, small organizations utilize the single-step method income statement and large companies such as Amazon use the multi-step method income statement to provide the public with detailed reporting. The conceptual framework is the building block to financial reporting as discussed in the course textbook in Chapter 1. This framework is the guideline to financial reporting to provide the proper and accurate estimation of money related data. http://www.wiley.com/legacy/college/kieso/0470374942/ifrs/ch02.pdf http://www.investopedia.com/ask/answers/101314/what-are-income-statement-presentation-formatsand-what-industries-use-them.asp Problem: 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: 1. 2. 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 Visit the SEC's Web site (http://idea.sec.gov/idea/searchidea/companysearch_idea.html). o Select a company filing of your choice that contains a multiple-step income statement. o Communicate your selection with your group (each of you should submit a different company). o Submit the link to this filing as proof of your research. Prepare a process documentation that o 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. o is in the form of a memorandum or as a numbered listing of items, depending on your individual preference. o 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? 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. Music Warehouse Adjusted Trial Balance December 31, 2008 Debit Cash Accounts Receivable $24,675 5,625 Inventory 65,980 Land 93,000 Building 289,000 Credit 75,000 Accumulated Depreciation Notes Payable 85,000 Accounts Payable 53,600 Interest Payable 4,750 Common Stock 10,000 120,000 Additional Paid-in Capital Dividends 10,000 59,980 Retained Earnings 937,500 Sales Sales Discounts Cost of Goods Sold 22,675 723,000 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%