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m2 Statement of Comprehensive Income For Students

1. The document explains the elements of a statement of comprehensive income (SCI), including net sales, cost of goods sold, selling expenses, and general/administrative expenses. 2. It details the components of net sales (sales less returns and discounts) and cost of goods sold (beginning inventory, net purchases, cost of goods available, ending inventory). 3. The document provides a simpler example SCI for ECQ Company with net sales, cost of goods sold, gross profit, expenses, and net income. Schedules for element computations are typically in the notes.

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13 views

m2 Statement of Comprehensive Income For Students

1. The document explains the elements of a statement of comprehensive income (SCI), including net sales, cost of goods sold, selling expenses, and general/administrative expenses. 2. It details the components of net sales (sales less returns and discounts) and cost of goods sold (beginning inventory, net purchases, cost of goods available, ending inventory). 3. The document provides a simpler example SCI for ECQ Company with net sales, cost of goods sold, gross profit, expenses, and net income. Schedules for element computations are typically in the notes.

Uploaded by

Jolhania Blahblehblah
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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WEEK 2-3

STATEMENT OF COMPREHENSIVE INCOME


Explanation of Exhibit 1:

A – HEADING
I. Name of the company
II. Name of the statement
III. Date of preparation (emphasis on the word “for the” to denote that the statement is only for that
specific period.)

B –Elements Of Sci
1. Net Sales (Sales less Sales returns and Sales discount)
I. Sales – this is the amount of revenue that the company was able to generate from selling products
II. Sales returns – this account is debited in order to record returns of customers or allowances for
such returns.(Haddock, Price, & Farina, 2012) Sales returns occur when customers return their
products for reasons such as but not limited to defects or change of preference.
III. Sales discount - this is where discounts given to customers who pay early are recorded. (Haddock,
Price, & Farina, 2012) Also known as cash discount. This is different from trade discounts which
are given when customers buy in bulk. Sales discount is awarded to customers who pay earlier or
before the deadline.

2. Cost of Goods Sold – this account represents the actual cost of merchandise that the company was able
to sell during the year. (Haddock, Price, & Farina, 2012)

I. Beginning inventory – this is the amount of inventory at the beginning of the accounting period.
This is also the amount of ending inventory from the previous period.
II. Net Cost of Purchases (Net Purchases + Freight In)
a. Net Purchases = Purchases – (Purchase discount and purchase returns)
b. Purchases – amount of goods bought during the current accounting period
c. Purchase discount – account used to record early payments by the company to
the suppliers of merchandise. (Haddock, Price, & Farina, 2012) This is how buyers
see a sales discount given to them by a supplier.
d. Purchase returns – account used to record merchandise returned by the company
to their suppliers. (Haddock, Price, & Farina,2012) This is how buyers see a sales
return recorded by their supplier
e. Freight In – this account is used to record transportation costs of merchandise
purchased by the company. (Haddock, Price, & Farina, 2012). It is called freight in
because this is recorded when goods are transported into the company.
III. Cost of Good available for Sale – add Beginning inventory and Net cost of Purchases
IV. Ending inventory – amount of inventory presented in the Statement of Financial Position. This is
the total cost of inventory unsold at the end of the accounting cycle.

3. Selling Expenses – these expenses are those that are directly related to the main purpose of a
merchandising business such as the sale and delivery of merchandise. However, this does not include cost
of goods sold and contra revenue accounts. (Haddock, Price, & Farina, 2012)

4. General and Administrative Expenses – these expenses are not directly related to the merchandising
function of the company but are necessary for the business to operate effectively. (Haddock, Price, &
Farina, 2012)
Simpler SCI:
The above SCI of ECQ Company can be presented in a much simpler form, taking only the four important
elements.

ECQ COMPANY
STATEMENT OF COMPREHENSIVE INCOME
FOR THE MONTH ENDED MAY 31, 2020

Net Sales P 540,000


Cost of Goods Sold (290,000)
Gross Profit 250,000
Selling Expenses (62,000)
General and Administrative Expenses (92,000)
Net Income P 96,000

The SCI in the face of the Financial Statement is usually presented in such simpler form. The schedule of
computations for each element is to be presented separately in the Notes to Financial Statement.

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