Question

The following income statement items appeared on the adjusted trial balance of Schembri Manufacturing Corporation for the year ended December 31, 2021 ($ in thousands): sales revenue, $15,300; cost of goods sold, $6,200; selling expenses, $1,300; general and administrative expenses, $800; interest revenue, $40; interest expense, $180. Income taxes have not yet been recorded. The company’s income tax rate is 25% on all items of income or loss. These revenue and expense items appear in the company’s income statement every year. The company’s controller, however, has asked for your help in determining the appropriate treatment of the following nonrecurring transactions that also occurred during 2021 ($ in thousands). All transactions are material in amount.

1. Investments were sold during the year at a loss of $220. Schembri also had an unrealized gain of $320 for the year on investments in debt securities that qualify as components of comprehensive income.
2. One of the company’s factories was closed during the year. Restructuring costs incurred were $1,200.
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 $560 in 2021 prior to the sale, and its assets were sold at a gain of $1,400.
4. In 2021, the company’s accountant discovered that depreciation expense in 2020 for the office building was understated by $200.
5. Negative foreign currency translation adjustment for the year totaled $240.

Required:
1. Prepare Schembri’s single, continuous multiple-step statement of comprehensive income for 2021, including 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, 2021.
2. Prepare a separate statement of comprehensive income for 2021

SCHEMBRI MANUFACTURING CORPORATION Statement of Comprehensive Income For the Year Ended December 31, 2021 ($ in 000s) Gross profit Operating expenses: Total operating expenses Operating income Other income (expense): Other income, net Income from continuing operations before income taxes Income from continuing operations Discontinued operations: Income on discontinued operations Net income Other comprehensive income, net of tax: Comprehensive income Earnings per share: Net income

Answer 1

Answer:

SCHEMBRI Statement of Comprehensive Income For the year Ended December 31 2021
	Amount in ($ in 000s)	Amount ($ in 000s)
Sales revenue		15300
Cost of goods sold		6200
Gross profit		9100
Operating expenses
Selling expenses	1300
General and administrative expenses	800
Restructuring costs	1200
Total operating expenses		3300
Operating income		5800
Other income (expense)
Loss on sale of investments	-200
Interest expense	-180
Interest revenue	40
Other income (expense)		-360
Income from continuing operations before income taxes		5440
Income tax expense @ 25%		-1360
Income from continuing operations		4080
Discontinued operations
Income from operations of discontinued component	840
Income tax expense	-210
Income from discontined operations		630
Net Income		4710
Other comprehensive income (loss)
Unrealized gains from investments net of tax	240
Loss from foreign currency translation neet of tax	-180	60
Comprehensive income		4770
Earnings per share:
Income from continuing operations		3.4
Income from discontinued operations		0.525
Net Income		3.925
1400-560=840*25%=210
320*75%=240; 240*0.75=336
Outstanding shares = 1000000*1+400000*0.5 = 1200000
Income from continuing operations =-4080/1200 =3.40
Income from discontinued operations = 630/1200 =0.53
Statement of Comprehensive Income For the year Ended December 31, 2018
Net Income		4710
Other comprehensive income (loss)
Unrealized gains from investments; net of tax	240
Loss on sale of investment	-180
Total other comprehensive income		60
Comprehensive income		4770