FABM2

PRES. SERGIO OSMENA HIGH SCHOOL

SENIOR HIGH SCHOOL
ABM 12
Prepared by: Mrs. Eleonor E. Mujal
 Statement of Comprehensive Income
(SCI)
Objectives:
1. Understand the purpose of Statement of
Comprehensive Income (SCI)
2. Identify the Elements of the SCI
3. Prepare a Single-step SCI for a service
company.
4. Prepare a multi-step SCI for a
Merchandising company.
5. Determine the normal balances of the
elements of SCI.
 STATEMENT OF COMPREHENSIVE INCOME
Also known as the income statement.
Results of the company’s operations for a specific
period of time which is called net income if it is a
net positive result while a net loss if it is a net
negative result.
This can be prepared for a month, a quarter or a
year.
It contains the following:
 Revenue generated by the operating business
 Costs spent to generate the revenue
 Income, which is the excess of revenue over costs.
1. Maria Reyes, is a regular customer of Juana Dela Cruz.
Maria Purchased 3 small cans of sardines that Juan
sells for P25 each. Maria asked Juana to include it on
her account. Juana purchased the sardines from her
wholesale supplier at P15 per can.
2. Pedro Benitez, rented a small space on the stores
countertop for his coffee vending machine. On October
1, 2001, he paid six months advance rental of P500 per
month.
3. Juana Dela Cruz, owner of the store, deposited P1,000
to the store savings account from her personal
account.

Which of the above transactions reported as Income?

 Two Kinds of Income
Revenue – income gains from a primary
operations of the business.
Gains – are income derived from other
activities of the business
Two Kinds of Expense
Expenses- are related to the primary
operations of the business.
Losses – are from other activities of the
business
Elements of the Statement of Comprehensive
Income
 REVENUE
 Service Income – account is generally used to
describe revenue derived from rendering
services. A more specific account name used,
such as Rental Income, Professional Fee
Income, Tuition fee revenue.
 Misalignment of School Year and Calendar Year.

• Twinkle-Twinkle Pre-school collected

tuition fee of P1,250,000 and P1,455,000
for the school years 2001-2002 and
2002-2003, respectively. The school
closed in April and May. Determine the
tuition fee revenue to be reported on SCI
for the calendar year 2002.
School Year 2001-2002 1,250,000
No. of months in one School Year 10
No. of months from Jan-Mar 2002 3
Tuition Fee Revenue for SY 2002 375,000

School Year 2002-2003 1,455,000

No. of months in one School Year 10
No. of months from Jun-Dec 2002 7
Tuition Fee Revenue for SY 2002 1,018,500
Total Tuition Fee Revenue for SY 2002 1,393,500
Sales Revenue – used to describe
revenue derived from selling of
goods. Such as, office supplies sales,
Book sales, Food sales, etc. Revenue
from sales of goods is recognized
when good have been delivered.
(Net Sales = Gross Sales-Sales return and
allowances-Sales Discount).
o Juana Dela Cruz, owner of Friendly Convenience
Store, sold 3 boxes of ballpoint pens to Mrs.
Gonzales on account at a price of P150 per boex or
P15 per pen. Juana gave Mrs. Gonzales two weeks
to pay the account. Moreover, Juana told Mrs.
Gonzales that she will deduct 2% discount if she
pays within a week.
o Mrs. Gonzales returned one week later. She
returned five pens and took advantage of the
discount.
o Determine the amount of Sales, Sales Return, Sales
Discount and Net Sales from the transaction with
Mrs. Gonzales.
Sales 150x3 450
Sales Return 15x5 (75.00)
Amount to be paid by Mrs. Gonzales before discount 375
Sales discount(375 x2%) 2% 8
Amount paid by Mrs Gonzales 367.5

Alternative:
Sales 450
Less:Sales Return and Allowances (75.00)
Less: Sales Discount (7.50)
Net Sales 367.5
Expenses
• Cost of good sold (Cost of Sales)- This is
the account use of the companies that
sells good instead of services.
• Cost of Sale is part of inventory accounting
which accountant has two ways of keeping
records of inventory.
• It is Perpetual and Periodic Inventory
System
• Perpetual means that the inventory and Cost
of Good Sold accounts are perpetually
updated.
• The inventory account is increased when good
for sale are acquired and decreased when
goods are sold.
• The Cost of Good Sold account is updated
every time as sale is made.
• Periodic inventory system – the inventory
account is periodically updated.
• Periodically means the inventory account is
updated only at the end of the year or end of
the month
• Cost of Merchandise acquired is collected
using Purchase account.
• Returns of defective goods are reported under
Purchase Return and allowances. Discounts
taken are reported under Purchase discount.
• Net purchases = Purchases + Freight-in –
Purchase Returns-Purchase discount
How is cost of goods sold determined in periodic inventory
system?
Juan Dela Cruz, owner of Friendly Convenience
Store, asked for your help to determine the cost of
sales of her store. This is the first year of
operations for Juana’s store. She provided the
following data to you.
Purchase( based on suppliers receipts) P 55,344
Freight-In(based in receipts of taxi fares she incurred when
she shops for merchandise at Divisoria) 430
Purchase Returns 760

Based on the inventory count taken at the

last day of the year, the ending inventory is
valued at P2,320. How much is cost of
sales?
Beg. Inventory (Remember this is the store's first year of operations) P0
Purchases (Based on Supplier's receipt) P 55,344
Add: Freight-In 430
Less: Purchase Returns (760)
Net Purchases P 55,014
Cost of goods available for sale P 55,014
Less: Ending Inventory (based on physical count) (2,320)
Cost of goods sold P 52,694
Operating Expenses
 Refer to all other expenses related to the
operation of the business, other than the cost
of sales. This includes salaries of employees,
supplies, utilities (electricity, telephone, and
water bills),gasoline expense, bad debts
expense, depreciation, and amortization.
 Bad debt expense – operating expense related
to accounts receivable. This are some account
that remain uncollectible.
Current year sales of the store amounted to P
128,865. Of this, only P 70,000 is sales. Based on
the company’s experience, bad debt is 3% of
total sales or 6.5% of credit sales. Determine the
bad debt expense:
1. Juana Dela Cruz, the manager owner decide
to use percentage of total sales method.
2. Juana Dela Cruz, the manager-owner decided
to use percentage of credit sales method.
 3% of total sales 6.5 % of credit sales
Total Sales P 128,865
Total credit sales P 58,865
Historical experiences 3% 6.50%
Bad debt expense P 3,866 P 3,826
Other Expenses and Other Income
Losses and other expenses as well as gains and other income
are reported after the operating section of SCI. Line item
included are interest income from investment of excess cash,
interest expense from borrowing and gain or loss from sale of
equipment (proceed from sale less net book value of PPE on
date on sale).