Question

The following income statement items appeared on the adjusted trial balance of Schembri Manufacturing Corporation for the year ended December 31, 2021 ($ in thousandsj: sales revenue, $18,900; cost of goods sold, $8,000: selling expenses $1.480; general and administrative expenses $980; Interest revenue, $240; Interest expense, $200. Income taxes have not yet been recorded. The company's income tax rate is 25% on all items of income or loss. These revenue and expense Items appear in the company's Income statement every year. The company's controller, however, has asked for your help in determining the appropriate treatment of the following nonrecurring transactions that also occurred during 2021($ In thousands). All transactions are material in amount. 1. Investments were sold during the year at a loss of $400. Schembri also had an unrealized gain of $560 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 $2.100. 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 $740 in 2021 prior to the sale, and its assets were sold at a gain of $1.760 4. In 2021, the company's accountant discovered that depreciation expense in 2020 for the office building was understated by $380. 5. Negative foreign currency translation adjustment for the year totaled $420. 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 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. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands. Round EPS answers to 2 decimal places.) Show less

Answer 1

1.

SCHEMBRI MANUFACTURING COMPANY
Statement of Comprehensive Income
For the Year Ended December 31, 2021
($ in 000s)
Sales revenue		18900
Cost of goods sold		-8000
Gross profit		10900
Operating expenses
Selling expense	-1480
General and administrative expense	-980
Restructuring costs	-2100
Total operating expenses		-4560
Operating income		6340
Other income (expense)
Loss on sale of investments	-400
Interest expense	-200
Interest revenue	240
Other income, net		-360
Income from continuing operations before income taxes		5980
Income tax expense (25% x $5980)		1495
Income from continuing operations		4485
Discontinued operations
Income from operations of discontinued component ($1760 - $740)	1020
Income tax expense (25% x $1020)	-255
Income on discontinued operations		765
Net income		5250
Other comprehensive income, net of tax
Gain on debt securities [$560 - (25% x $560)]	420
Foreign currency translation adjustment [$420 - (25% x $420)]	-315	105
Comprehensive income		5355
Earnings per share:
Income from continuing operations		$       3.74
Income from discontinued operations		$       0.64
Net income		$       4.38

Working:

Earnings per share = Net income/Weighted average number of common shares outstanding

Dates	# of shares outstanding	Portion of year	Weighted Avg. shares outstanding
Jan. 1, 2018 to Jun. 30, 2018	1000000	6/12	500000
Jul. 1, 2018 to Dec. 31, 2018	1400000	6/12	700000
			1200000

Earnings per share:

Income from continuing operations = $4485000/1200000 = $3.74

Income from discontinued operations = $765000/1200000 = $0.64

2.

SCHEMBRI MANUFACTURING COMPANY
Statement of Comprehensive Income
For the Year Ended December 31, 2021
($ in 000s)
Net income		5250
Other comprehensive income, net of tax
Gain on debt securities	420
Foreign currency translation adjustment	-315
Total other comprehensive income		105
Comprehensive income		5355