ACCOUNTING Question 1 (of 3) The following income statement items appeared on th

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ACCOUNTING Question 1 (of 3) The following income statement items appeared on the adjusted trial balance of Schembri Manufacturing Corporation for the year ended December 31, 2016 ($ in 000s) sales revenue, $15,300; cost of goods $6,200; selling "expenses, $1,300; general and administrative expenses, $800; interest revenue, $85 interest expense $180 Income taxes have not yet been recorded. The companys income tax rate is 40% on all items of income or loss. These revenue and expense items appear in the company's income statement every year. The company's controller, however, has asked for your help in determining the appropriate treatment of the following nonrecurring transactions that also occurred during 2016 (S in 000s) All transactions are material in amount. 1 Investments were sold during the year at a loss of $220 Schembri also had unrealized gains of $320 for the year on investments. 2 One of the company's factories was closed during the year. Restructuring costs incurred were $1.200 3. During the year, Schembrí completed the sale of one of its operating divisions that qualifies as a component of the entity according to GAAP The division had incurred a loss from operations of $560 in 2016 prior to the sale, and its assets were sold at a gain of $1.400 4 In 2016, the company's accountant discovered that depreciation expense in 2015 for the office building was understated by $200 5. Foreign currency translation losses for the year totaled $240 Required: 1. Prepare Schembri's single, continuous multiple-step statement of comprehensive income for 2016 including basic eamings per share disclosures One milon shares of common stock were outstanding at the be be deducted should be indicated with a minus sign. Enter your answers in thousands. Round EPS answers to 2 decimal places.) of the year and an additional 400,000 shares were issuied on July 1 2016 (Amounts to Type here to search

Explanation / Answer

SCHEMBRI MANUFACTURING CORPORATION

STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED DECEMBER 31 2016

$('000)

**weighted average common shares = [1000 *12/12]outstanding for 12 months + [400*6/12] outstanding for 6 months

               = 1000+200

                  =1200 shares

2)

SCHEMBRI MANUFACTURING CORPORATION

STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED DECEMBER 31 2016

SCHEMBRI MANUFACTURING CORPORATION

STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED DECEMBER 31 2016

$('000)

Sales revenue 15300 less:cost of goods sold (6200) Gross margin 9100 operating expense selling expense 1300 general and administration expense 800 Restructuring cost 1200 Total operating expense (3300) operating income 5800 other income /(loss) loss on sale of investment (220) Interest revenue 85 Interest expense (180) Total other revenue /(expense) (315) Income from continuing operations before tax 5485 less:income tax expense [5485*.40] (2194) Income from continuing operations 3291 Discontinued operations Income from operation of discontinued component [1400-560] 840 Income tax expense [840*.40] (336) Income from discontinued operations 504 Net income 3795 other comprehensive income/(loss) unrealised gain on investment ,net of tax [320(1-.4)] 192 loss from foreing currency translation ,net of tax [-240(1-.4)] (144) 48 comprehensive income 3843 Earning per share Income from continuing operations [3291/1200] 2.74 Income from discontinued operations [504/1200] .42 Net income 3.16

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