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:

1. 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.
   • I chose Hershey Co and this is the website -->>http://www.sec.gov/cgi-bin/viewer?action=view&cik=47111&accession_number=0001193125-12-067143&xbrl_type=v#
   • 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
Prepare a statement of changes in stockholder's equity for Music Warehouse.</listyle="box-sizing:>

 

 

Music Warehouse
Adjusted Trial Balance
December 31, 2008
Â
Â	Debit	Credit
Cash	$24,675	Â
Accounts Receivable	5,625	Â
Inventory	65,980	Â
Land	93,000	Â
Building	289,000	Â
Accumulated Depreciation	Â	75,000
Notes Payable	Â	85,000
Accounts Payable	Â	53,600
Interest Payable	Â	4,750
Common Stock	Â	10,000
Additional Paid-in Capital	Â	120,000
Dividends	10,000	Â
Retained Earnings	Â	59,980
Sales	Â	937,500
Sales Discounts	22,675	Â
Cost of Goods Sold	723,000	Â
Salaries	81,000	Â
Utilities	8,900	Â
Repairs & Maintenance	5,225	Â
Telephone	2,850	Â
Interest Expense	4,400	Â
Depreciation Expense	9,500	Â
Â	Â	Â
Â	$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%