STATEMENT OF

COMPREHENSIVE
INCOME
LEARNING OBJECTIVES:

 Identify the elements of the SCI and describe each of

these items for a service business and a merchandising
business
 Prepare an SCI for a service business using the single –
step approach
 Prepare an SCI for a merchandising business using the
multi – step approach.
RECAP!!!!
 Accrual
 Revenues

 Expenses

 Service business

 Merchandising business
ACTIVITY!!!!!

 Write your monthly allowance (daily allowance x no. of

school days)
 Write the amount you spend on food, transportation,
load, etc.
 Deduct the amount you spend from your monthly
allowance
STATEMENT OF COMPREHENSIVE
INCOME

Also known as the income statement. Contains the

results of the company’s operation for a specific period of
time which is called net income if it is a positive result
while a net loss if it is a negative result. This can be
prepared for a month, a quarter or a year.
TEMPORARY ACCOUNTS
Also known as a nominal accounts are the accounts
found under the SCI. they are called such because at the
end of the accounting period, balances under these
accounts are transferred to the capital account, thus having
only temporary amounts and resulting to zero beginning
balances at the beginning of the following year. Examples
of temporary accounts include revenues, sales, utilities
expense, supplies expense, salaries expense, depreciation
expense, interest expense, etc.
 Heading
LEARNING IS FUN COMPANY
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31, 2016
Revenue

Service Revenue ₱100,000.00

Expenses:
Expenses
Salaries Expense ₱40,000.00
Rent Expense 20,000.00
Depreciation Expense 10,000.00
Utilities Expense 5,000.00
Miscellaneous Expense 1,000.00
Total Expenses ₱76,000.00
Net Income ₱24,000.00

Net Income/Loss
FORMAT IN PREPARING
 Single – step – called single steps because all revenues
are listed down in one section while all expenses are
listed in another. Net income is computed using a “single
– step” which is Total Revenues minus Total Expenses.

 Multi – step – called multi step because there are several

steps needed in order to arrive at the company’s net
income.
SAMPLE OF MULTI – STEP SCI
1. First part is sales. This is the total amount of revenue that
the company was able to generate from selling products.
2. Second part compose of contra revenue – called contra
because it is on the opposite side of the sales account. The
sales account is on the credit side while the reductions to
sales accounts are on the debit side. This is contrary to the
normal balance of the sales or revenue accounts.
a. Sales Returns is debited in order to record returns of
customers or allowances for such returns. Sales Return
occur when customers return their products for reasons
such as but not limited to defects or change of preference.
b. Sales Discounts – this is where discounts is given to
customers who pay early are recorded. Also known as cash
discount.
3. Sales less Sales Returns and Sales Discount is Net Sales
4. Third part is the Cost of Goods Sold – this account represents the actual cost of
merchandise that the company was able to sell during the year.
a. Beginning Inventory – this is the amount of inventory at the beginning of the
period.
b. Net Cost of Purchases = Purchases + Freight In
Purchases – amount of goods bought during the accounting period.
Contra Purchases – an account that is credited being contrary to the normal
balance of the purchase account (Purchase discount & purchase returns)
Freight In – this account is used to record transportation costs of merchandise
purchased by the company.

*add Beginning Inventory & Net Cost of Purchases to get Cost of Goods Available for
Sale.
Ending Inventory – the amount of inventory presented in the SFP. Total cost of
inventory unsold at the end of the accounting cycle.
5. Sales less Costs of Goods Sold is Gross Profit
6. Fourth part is 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.

7. Fifth part is Selling Expenses – these expenses are those

that are directly related to the main purpose of
merchandising business.
8. Gross Profit less General and Administrative Expenses
less Selling Expenses is Net Income/Loss.
GENERAL AND ADMINISTRATIVE EXPENSES

Typical items listed as general and administrative

expenses include:

 Rent
 Utilities

 Insurance

 Executives wages and benefits

 The depreciation on office fixtures and equipment

 Legal counsel and accounting staff salaries

 Office supplies
SELLING EXPENSE (OR SALES EXPENSE)
Selling expenses can include:

 Distribution costs such as logistics, shipping and

insurance costs
 Marketing costs such as advertising, website
maintenance and spending on social media
 Selling costs such as wages, commissions and out-of-
pocket expenses
 HAPPY SELLING COMPANY
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31, 2016

Sales ₱500,000.00
Sales Returns ₱30,000.00

Sales Discounts 10,000.00 ₱40,000.00

Net Sales ₱460,000.00
Cost of Goods Sold
Beginning Inventory 250,000.00
Net Cost of Purchases
Purchases ₱100,000.00
Purchase Returns - 20,000.00
Purchase Discounts - 10,000.00
Net Purchases ₱70,000.00
Freight In 15,000.00 ₱85,000.00
Cost of Goods Sold Available for Sale 335,000.00
Ending Inventory - 50,000.00 285,000.00
Gross Profit ₱175,000.00
Less: Expenses
General & Administrative Expenses
Salaries Expense ₱20,000.00
Rent Expense 15,000.00
Deprecation Expense 10,000.00
Utilities Expense 5,000.00
Miscellaneous Expense 1,000.00 ₱51,000.00
Selling Expenses
Advertising Expense 18,000.00
Freight - Out 7,000.00
Sales Commission Expense 6,000.00 31,000.00
Total Expenses 82,000.00
SAMPLE PROBLEMS
o Learning is Fun Company generated revenues amounting
to Php100,000.00. Expenses for the year totalled
Php76,000.00. How much is the company’s net income
for the year?

Solution:
Revenue – Expenses = Net Income
100,000 – 76,000 = 24,000.00
 Happy Selling’s Sales amounted to Php500,000.00. Sales returns and
sales discounts amounted to Php30,000.00 and Php10,000 respectively.
Purchases of the company totalled to Php100,000.00 while purchase
returns and purchase discounts amounted to Php20,000 and Php10,000
respectively. How much is the company’s Net Sales? Net Purchase?

Solution:
Net Sales = Sales – Sales Returns – Sales Discounts
= 500,000 – 30,000 – 10,000
= Php460,000.00
Net Purchases = Purchases – Purchase Return – Purchase Discount
= 100,000 – 20,000 – 10,000
= Php70,000
 At the end of the first month of operations for Juan’s
Service Company, the business had the following accounts:
Cash – Php19,000, Prepaid Rent – Php500, Equipment –
Php5,000, Accounts Payable – Php2,000. By the end of the
month, Jackson’s had earned Php20,000 of Revenues,
Php1,000 of Utilities Expenses and Php1,500 of Salaries
Expense. Calculate the net income to be reported by the
company for this month.
ANSWER!!!
Net Income = Revenue – Expenses
= 20,000 – 1,000 – 1,500
= Php17,500
 Prepare a multi – step income statement for the Appully
Company, a clothing retailer, for the year ending December
21, 2017, given the information below:

o Advertising Expense – Php68,000.00

o Beginning Inventory – Php256,000.00
o Depreciation – Php78,000.00
o Ending Inventory – Php248,000.00
o Sales – Php3,210,000.00
o Interest Expense – Php64,000.00
o Salary – Php240,000.00
o Purchases – Php500,000.00
 The Appully Company
Statement of Comprehensive Income
For the Year Ended December 31, 2017

Sales ₱3,210,000.00
Cost of Goods Sold
Beginning Inventory ₱256,000.00
Purchases 500,000.00
Cost of Goods Available for Sale 756,000.00
Ending Inventory - 248,000.00 ₱508,000.00
Gross Profit ₱2,702,000.00
Less: Expenses
General and Administrative Expenses
Depreciation 78,000.00
Interest Expense 64,000.00
Salary Expense 240,000.00 382,000.00
Selling Expenses
Advertising Expense 68,000.00 68,000.00
Total Expenses 450,000.00
Net Income ₱2,252,000.00
 Tylor Electronics Company listed its balances for the
month ended June 30, 2018. Prepare a multi – step income
statement using this balances:

o Beginning Inventory – Php33,900

o Salary – Php10,000.00
o Sales Discount – Php2,700.00
o Sales Revenue – Php296,500.00
o Sales Commission – Php7,500.00
o Utilities Expense – Php10,000.00
o Freight – In – Php500.00
o Freight – Out – Php1,500
 Tylor Electronics Company
Statement of Comprehensive Income
For the Month Ended June 30, 2017

Sales Revenue ₱296,500.00

Sales Discount -₱2,700.00 - 2,700.00

Net Sales ₱299,200.00
Cost of Goods Sold

Beginning Inventory 33,900.00

Purchases 26,500.00

Freight - In 500.00

Net Purchases 27,000.00 60,900.00

Gross Profit ₱238,300.00
Expenses
General and Administrative Expenses

Utilities Expense 10,000.00

Salary Expense 10,000.00 20,000.00

Selling Expenses

Sales Commission 7,500.00

Advertising Expense 1,500.00 9,000.00

Total Expenses 29,000.00

Net Income ₱270,200.00
ASSIGNMENT!!!!
T Company reported the following information on its
income statement for the first quarter of the year.

  January February March

Sales ₱375,000.00 ₱750,000.00 ?

Sales Return 32,000.00 ? 25,000.00

Sales Discounts 12,000.00 9,000.00 15,000.00

Net Sales ? 736,000.00 ?

Cost of Goods Sold 255,000.00 ? 620,000.00

Gross Profit ? 310,000.00 185,000.00

Required: Calculate the missing information.