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Summary Business Accounting
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  • Course
  • Introduction to Economics
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  • Cambridge College

The following income statement items appeared on the adjusted trial balance of Schembri Manufacturing Corporation for the year ended December 31, 2013 ($ in 000s): sales revenue, $15,300; cost of goods sold, $6,200; selling expenses, $1,300; general and administrative expenses, $800; interest rev...

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  • July 5, 2022
  • 5
  • 2021/2022
  • Summary

Subjects

  • business accounting

Written for

  • Cambridge College
  • Introduction to Economics
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Question:

The following income statement items appeared on the adjusted trial balance of Schembri Manufacturing

Corporation for the year ended December 31, 2013 ($ in 000s): sales revenue, $15,300; cost of goods

sold,

$6,200; selling expenses, $1,300; general and administrative expenses, $800; interest revenue, $85;

interest expense, $180. Income taxes have not yet been accrued. The company’s 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 2013 ($ 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. An earthquake destroyed a warehouse causing $2,000 in damages. The event is considered to be

unusual and infrequent.

4. 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 $560 in

2013 prior to the sale, and its assets were sold at a gain of $1,400.

5. In 2013, the company’s accountant discovered that depreciation expense in 2012 for the office building

was understated by $200.

6. Foreign currency translation losses for the year totaled $240.

Required:

1. Prepare Schembri’s single, continuous multiple-step statement of comprehensive income for 2013,

including basic earnings per share disclosures. One million shares of common stock were outstanding at

the beginning of the year and an additional 400,000 shares were issued on July 1, 2013.

2. Prepare a separate statement of comprehensive income for 2013.

, Answer:




SCHEMBRI MANUFACTURING CORPORATION

Statement of Comprehensive Income

For the Year Ended December 31, 2013

($ in 000s)



Sales revenue ......................................................................... $15,300

Cost of goods sold .................................................................. 6,200

Gross profit ............................................................................ 9,100

Operating expenses:

Selling ................................................................................. $1,300

General and administrative ................................................. 800

Restructuring costs .............................................................. 1,200

Total operating expenses ................................................ 3,300

Operating income ................................................................... 5,800



Other income (expense):

Loss on sales of investments ....................................................................
$(220)

Interest expense .......................................................................................(180)

Interest revenue ........................................................................................ 85

Other income (expense) ........................................................................ (315)

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