The following income statement items appeared on the adjusted trial balance of S
ID: 2418340 • Letter: T
Question
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, $19,100; cost of goods sold, $8,100; selling expenses, $1,490; general and administrative expenses, $990; interest revenue, $250; interest expense, $220. Income taxes have not yet been recorded. The company’s income tax rate is 30% on all items of income or loss. These revenue and expense items appear in the company’s income statement every year. The company’s controller, however, has asked for your help in determining the appropriate treatment of the following nonrecurring transactions that also occurred during 2016 ($ in 000s). All transactions are material in amount.
Investments were sold during the year at a loss of $410. Schembri also had unrealized gains of $510 for the year on investments.
During the year, Schembri 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 $700 in 2016 prior to the sale, and its assets were sold at a gain of $1,700.
In 2016, the company’s accountant discovered that depreciation expense in 2015 for the office building was understated by $390.
Prepare Schembri’s single, continuous multiple-step statement of comprehensive income for 2016, including basic earnings per share disclosures. One million shares of common stock were outstanding at the beginning of the year and an additional 800,000 shares were issued on July 1, 2016. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands. Round EPS answers to 2 decimal places.)
Prepare a separate statement of comprehensive income for 2016. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands.)
SCHEMBRI MANUFACTURING CORPORATION
Statement of Comprehensive Income
For the Year Ended December 31, 2016
($ in 000s)
Net income
Other comprehensive income (loss)
Unrealized gains from investments, net of tax $510
Loss from foreign currency translation, net of tax $430
Total other comprehensive income 940
Comprehensive income$940
The following income statement items appeared on the adjusted trial balance of Schembri Manufacturing Corporation for the year ended December 31, 2016 ($ in 000s): sales revenue, $19,100; cost of goods sold, $8,100; selling expenses, $1,490; general and administrative expenses, $990; interest revenue, $250; interest expense, $220. Income taxes have not yet been recorded. The company’s income tax rate is 30% on all items of income or loss. These revenue and expense items appear in the company’s income statement every year. The company’s controller, however, has asked for your help in determining the appropriate treatment of the following nonrecurring transactions that also occurred during 2016 ($ in 000s). All transactions are material in amount.
1.Investments were sold during the year at a loss of $410. Schembri also had unrealized gains of $510 for the year on investments.
2. One of the company’s factories was closed during the year. Restructuring costs incurred were $2,200. 3.During the year, Schembri 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 $700 in 2016 prior to the sale, and its assets were sold at a gain of $1,700.
4.In 2016, the company’s accountant discovered that depreciation expense in 2015 for the office building was understated by $390.
5. Foreign currency translation losses for the year totaled $430. Required: 1.Prepare Schembri’s single, continuous multiple-step statement of comprehensive income for 2016, including basic earnings per share disclosures. One million shares of common stock were outstanding at the beginning of the year and an additional 800,000 shares were issued on July 1, 2016. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands. Round EPS answers to 2 decimal places.)
SCHEMBRI MANUFACTURING CORPORATION Statement of Comprehensive Income For the Year Ended December 31, 2016 ($ in 000s) Sales revenue $19,100 Cost of goods sold (8,100) Gross profit 11,000 Operating expenses Selling expense $1,490 General and administrative expense 990 Total operating expenses 2,480 Operating income 8,520 Other income (expense) Interest revenue $250 Loss on sales of investments 410 Interest expense 220 Other income (expense) 880 Income from continuing operations before income taxes 7,640 Income tax expense 2,292 Net income 5,348 Other comprehensive income (loss) Unrealized gains from investments, net of tax 510 Loss from foreign currency translation, net of tax (430) Other comprehensive income (loss) 80 5,268 0 Comprehensive income $5,268 Earnings per share: Income from continuing operations Discontinued operations Net incomeExplanation / Answer
Required statement is prepared as under:
SCHEMBRI MANUFACTURING CORPORATION Statement of Comprehensive Income For the Year Ended December 31, 2016 ($ in 000s) Sales revenue $19,100 Cost of goods sold -8,100 Gross profit 11,000 Operating expenses Selling expense $1,490 General and administrative expense 990 Total operating expenses 2,480 Operating income 8,520 Other income (expense) Interest revenue $250 Loss on sales of investments -410 Interest expense -220 Other income (expense) ($380) Income from continuing operations before income taxes 7,640 Income tax expense 2,292 Gain on sale of operation net of tax 700 Net income from continuing operations 6,048 Income from discontinuing operations Restructuring Costs net of tax -1,540 Net Income 4,508 Other comprehensive income (loss) Unrealized gains from investments, net of tax 510 Loss from foreign currency translation, net of tax -430 Other comprehensive income (loss) 80 4,588 Comprehensive income $4,588 Earnings per share: Income from continuing operations 0.0034 Discontinued operations -0.0009 Net income 0.0025Related Questions
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