Requirements:

Prepare a memo from Kelly to Andrew and Kevin that includes:

1. Income Statement (Multi-Step) for the month ended July 31, 2017

a. The tax rate for Titan Ocean Adventures is 30% and has not been paid yet for the year

2. Statement of Retained Earnings for the month ended July 31, 2017

3. Classified Balance Sheet as of July 31, 2017

4. Statement of Cash Flows for the month ended July 31, 2017. Use the indirect method.

5. Explanation of the similarities and differences between the Income Statement and Operating Activities section of the Statement of Cash Flows. What type of information is each statement conveying? Be specific and provide at least two similarities and two differences.

6. Explanation of what Andrew and Kevin should do differently to enhance future operations and profitability of the business going forward. Be specific and provide at least two examples.

Notes:

-All financial statements should be prepared according to the formats outlined in your textbook and Financial Data Format reference document available on TITANium

-All numbers should be rounded to whole numbers. Please do not include any decimals.

PW AUDIO SUPPLY, INC. Income Statement For the Year Ended December 31, 2017 Sales Sales revenue Less: Sales returns and allowances $480,000 $12,000 8,000 Calculation of gross profit 20,000 460,000 316,000 144,000 Sales discounts Net sales Cost of goods solod Gross profit Operating expenses Salaries and wages expense Utilities expense Advertising expense Depreciation expense Freight-out Insurance expense 64,000 17,000 16,000 8,000 7,000 2,000 Calculation of ncome from operations Total operating expenses Income from operations Other revenues and gains 114,000 30,000 Results of activities not related to operations Interest revenue Gain on disposal of plant assets 3,000 600 3,600 Other expenses and losses Interest expense Casualty loss from vandalism 1,800 200 2,000 Income before income taxes Income tax expense Net income 31,600 10,100 21,500 PW AUDIO SUPPLY, INC. Income Statement For the Year Ended December 31, 2017 Sales Sales revenue Less: Sales returns and allowances $480,000 $12,000 8,000 Calculation of gross profit 20,000 460,000 316,000 144,000 Sales discounts Net sales Cost of goods solod Gross profit Operating expenses Salaries and wages expense Utilities expense Advertising expense Depreciation expense Freight-out Insurance expense 64,000 17,000 16,000 8,000 7,000 2,000 Calculation of ncome from operations Total operating expenses Income from operations Other revenues and gains 114,000 30,000 Results of activities not related to operations Interest revenue Gain on disposal of plant assets 3,000 600 3,600 Other expenses and losses Interest expense Casualty loss from vandalism 1,800 200 2,000 Income before income taxes Income tax expense Net income 31,600 10,100 21,500