Question

The following income statement items appeared on the adjusted trial balance of Schembri Manufacturing Corporation for the year ended December 31, 2018 ($ in 000s): sales revenue, $18,300; cost of goods sold, $7,700; selling expenses, $1,450; general and administrative expenses, $950; interest revenue, $230; interest expense, $320. Income taxes have not yet been recorded. The company’s income tax rate is 20% on all items of income or loss. These revenue and expense items appear in the company’s income statement every year. The company’s controller, however, has asked for your help in determining the appropriate treatment of the following nonrecurring transactions that also occurred during 2018 ($ in 000s). All transactions are material in amount. Investments were sold during the year at a loss of $370. Schembri also had unrealized gains of $470 for the year on investments. One of the company’s factories was closed during the year. Restructuring costs incurred were $1,800. 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 $710 in 2018 prior to the sale, and its assets were sold at a gain of $1,700. In 2018, the company’s accountant discovered that depreciation expense in 2017 for the office building was understated by $350. Negative foreign currency translation adjustment for the year totaled $420. Required: 1. Prepare Schembri’s single, continuous multiple-step statement of comprehensive income for 2018, including earnings per share disclosures. One million shares of common stock were outstanding at the beginning of the year and an additional 200,000 shares were issued on July 1, 2018. 2. Prepare a separate statement of comprehensive income for 2018. Prepare Schembri’s single, continuous multiple-step statement of comprehensive income for 2018, including earnings per share disclosures. One million shares of common stock were outstanding at the beginning of the year and an additional 200,000 shares were issued on July 1, 2018. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands. Round EPS answers to 2 decimal places.)

Answer 1

Particulars	Amount	Amount
Sales revenue		18,300.00
Cost of goods sold		-7,700.00
Gross profit		10,600.00
Operating expenses:
Selling expenses	1,450.00
General and administrative expenses	950
Restructuring costs	1,800.00
Total operating expenses		-4,200.00
Operating income		6,400.00
Other income (expense)
Loss on sale of investments	-370
Interest revenue	230
Interest expense	-320
Other income (expense)		-460
Income from continuing operations before income taxes		5,940.00
Income tax expenses		-1,188.00
Income from continuing operations before extraordiary items		4,752.00
Discontinued operations:
Income from operations of discontinued component ($1700-$710)	990
Income tax expenses	-198
Income (loss) from discontinued operations		792
Income before extraordinary item		5,544.00
Loss from extraordinary items		0
Net income		5,544.00
Other comprehensive income:
Loss from foreign currency translations ($420-$420*20%)	-336
Unrealized gains from investments ($470-$470*20%)	376	40
Comprehensive income		5,584.00
Earnings per share
Income from continuing operations before extraordinary items ($4752/1100)	4.32
Discointinued operations(792/1100)	0.72
Extraordinary gain (loss)	0
Net income (loss) ($5544/1100)	5.04

Calculations and explanations:

1. No. of shares for EPS calcutaions = opening number + issue during the year/2 = 1 million+200,000/2 = 1,100,000 shares