The following income statement items appeared on the adjusted trial balance of S
ID: 2417211 • 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 $390.
Prepare Schembri’s single, continuous multiple-step statement of comprehensive income for 2016, including basic earnings per share disclosures. One million shares of common stock were outstanding at the beginning of the year and an additional 800,000 shares were issued on July 1, 2016. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands. Round EPS answers to 2 decimal places.)
Prepare a separate statement of comprehensive income for 2016. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands.)
The following income statement items appeared on the adjusted trial balance of Schembri Manufacturing Corporation for the year ended December 31, 2016 ($ 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.
Explanation / Answer
Statement of Income Revenue 19100 Cost of Goods sold 8100 Gross Profit 11000 Operating expenses: Selling Expenses 1490 General & Admin Expenses 990 Restructuring costs $2,200 Total operating expenses $4,680 Operating Income $6,320 Other incorne(expenses): Loss on sale of investment ($410) Interest expenses ($220) Interest income ($630) Income frorn continuing operation before taxes &extraordinary items $5,690 Income Taxes $1,707 Income from continuing operation before extraordinary items $3,983 Discontinued operations: Income frorn operation from discontinued coral: (1700-700) $1,000 Income taxes -$300.0 $700.0 Income before extraordinary items $3,283 Extraordinary items: Loss from earthquake-net of $800 tax benefit -1200 Net Income $2,083
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