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Individual Portion: Visit the SEC's Web site. Select a company filing of your choice that contains a multiple-step income statement. Communicate your selection with your

Individual Portion:

  1. Visit the SEC's Web site.
    • 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.
  2. 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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