Statement of

Comprehensive
Income
 A statement of comprehensive
income is conventionally compared
to a running video because it
presents an entity’s business
activities from the start to the end of
the period. Generally it contains the
revenues and expenses incurred by
an entity for the specific period.
 The appropriate title of the statement
must be properly identified and dated so
that it will enable the users to
differentiate the statement of
comprehensive income from the other
financial report issued by the entity.
 Revenues are the first line item in the statement
of comprehensive income. Revenues earned by
the business vary according to the nature of the
entity. Also, revenues may come from interest
and dividends earned on financial instrument
such as time deposit and equity shares,
respectively. Smaller and less complex entities
will have one or two sources of revenue.
Finally, remember that revenues are recorded
when earned rather when the related cash is
released.
 Revenues earned by business are matched with
expenses. For service entities, expenses are
usually categorized as cost of services or
operating expenses. Operating expenses, on the
other hand, include rent for office space,
salaries for office staff, permits paid to local
government units, depreciation of office
equipment and other similar expenses. For a
merchandising concern, the expense are
classified as either cost of sales, selling
expenses or administrative (operating)
expenses.
 The cost of sales is the amount paid or payable
by the business entity to its suppliers for the
merchandise sold to the business entity’s
customers with the general formula of:
Beginning Inventory
Add: net purchases
Total goods available for sale
Less: ending inventory
Cost of sales
Where: beginning inventory is the stock of goods
carried over from prior reporting period and
net purchase for the year is the total amount
paid or payable to suppliers for the period.
Gross purchases
Less: Purchase Discount
Less: Purchase Returns and Allowances
Add: Freight in
Net purchases
Where: gross purchases are the general ledger
balance of the purchases account for the period;
purchase discounts are usually granted by
suppliers to buyers to encourage prompt
payment of latter’s account; suppliers may
grant purchase returns and allowances for
merchandise purchase and freight in are
expenses incurred in order to transport the
merchandise to the place of buyers.
 Gains are incidental to the operation of
the business. It represent other items
that meet the definition of income and
may, or may not, arise in the course of
the ordinary activities of an entity.
 Losses, on the other hand, is to an
expense as a gain is to a revenue. It
represents other items that meet the
definitions of expenses and may, or may
not, arise in the course of the ordinary
activities of the entity.
 It includes the computation of the total
comprehensive that are income taxes and
items of other comprehensive income.
Income tax is the sum of money
payable to the government
Items of other comprehensive income
are increases or decreases in economic
benefit for a period.
 Following is a pro-forma or model statement of
comprehensive income for a service
organization. The statement starts with the
heading. The main source of revenue of the
organization is presented.
 Operating expenses are then presented it is
customary for service industries operated a
sole proprietors to omit the cost of services.
One should note that operating expenses are
arranged according to recorded amount from
highest to lowest.
 After which, gain from ancillary
transactions are presented. The gain
pertains to the sale of equipment. Such
gain cannot be presented as revenues as
the gain is not normally incurred during
operations.
 After the gain, income taxes are
presented. Income taxes are deducted
from income before income taxes to
arrive at the net income. After which,
other comprehensive income is added to
arrive at total comprehensive income.
1. Graph the appropriate title
UY LAW OFFICE
Statement of Comprehensive Income
For the year ended December 31, 2015

2. The total revenue from the Trial Balance

UY LAW OFFICE
Statement of Comprehensive
For the Year Ended December 31, 2015

Professional Fees 247,500

3. The total Operating Expenses
UY LAW OFFICE
Supporting Schedule
For the Year Ended December 31, 2015

Professional Fees 247,500

Operational Expenses (Note A) 72,500

UY LAW OFFICE
Statement of Comprehensive Income
For the Year Ended December 31, 2015

Representation Expense 25,000

Salaries Expense 15,000
Rent Expense 10,000
Permit and Licenses Expenses 10,000
Utilities Expense 8,000
Office Supplies Expense 3,000
Depreciation Expense 1,000
Interest Expense 500
Operating Expense 72,500
4. Determine the effect of other items
Based on a cursory search of the worksheet,
there are no items pertaining to gains, losses
and other comprehensive income. Income taxes
are also ignored in the case. Having notice such
items, operational income can now be
determined by deducting operating expenses
from professional fees, as shown below:
UY LAW OFFICE
Statement of Comprehensive Income
For the Year Ended December 31, 2015

Professional Fees 247,500

Operating Expenses (Note A) (72,500)
Net Income 175,000
UY LAW OFFICE
Statement of Comprehensive Income
For the Year Ended December 31, 2015

Representation Expense 25,000

Salaries Expense 15,000
Rent Expense 10,000
Permit and Licenses Expenses 10,000
Utilities Expense 8,000
Office Supplies Expense 3,000
Depreciation Expense 1,000
Interest Expense 500
Operating Expense 72,500
Some users of financial statements may prefer to see the
composition of the operating expenses on the face of the
statement of comprehensive income. This method will
eliminate the need for a supporting schedule.

UY LAW OFFICE
Statement of Comprehensive Income
For the Year Ended December 31, 2015

Professional Fees 247,000

Operating Expenses
Representation Expense 25,000
Salaries Expense 15,000
Rent Expense 10,000
Permit and Licenses Expenses 10,000
Utilities Expense 8,000
Office Supplies Expense 3,000
Depreciation Expense 1,000
Interest Expense 500 72,500
Net Income 175,000
 Best Shirts Co. buys t-shirts from various
suppliers and resells them at a margin. You are
tasked to make a statement of comprehensive
income. Ignore the effect of income taxes.
Inventory based on a year end count on
December 31, 2015, amounts to 1,750,000.
 It is determined that salaries, rent, utilities and
depreciation expense pertain to selling (20%)
and administrative functions (80%). The entity
elects to use the function of expense format.
1. Determine the Revenues

BEST SHIRTS
Statement of Comprehensive Income
For the Year Ended December 31, 2015

Net Sales (Note 1) 14,870,000

BEST SHIRTS
Supporting Schedules
For the Year Ended December 31, 2015

Note 1 – Net Sales

Sales 15,000,000
Less: Sales Discounts (120,000)
Sales Returns and Allowances (10,000)
Net Sales 14,870,000
2. Determine the Net Purchases, Cost of Sales and
Gross Profit
Note 2 – Net Purchases
Purchases 8,000,000
Add: Freight-In 200,000
Less: Purchase Discounts (100,000)
Purchase Returns and Allowances (10,000)
Net Purchases 8,090,000

Now that net purchase has been determined, the cost of

sales can now be computed.
Note 3 – Cost of Sales
Inventory, 1/1/2015 2,000,000
Add: Net Purchase (Note 1) 8,090,000
Total Goods Available for Sale 10,090,000
Less: Inventory 12/31/2015 1,750,000
Cost of Sales 8,340,000
After determining the cost of sales, the said
amount should now be placed in the partial
statement of comprehensive income

BEST SHIRTS
Statement of Comprehensive Income
For the Year Ended December 31, 2015

Net Sales (Note 1) 14,870,000

Cost of Sales (Note 3) 8,340,000
Gross Profit 6,530,000

Gross Profit is computed as the difference

between the net sales and cost of sales.
3. Determine the Selling Expenses
ALLOCATION OF EXPENSE
Nature Total Selling (20%) Administrative
(80%)
Salaries Expense 1,000,000 200,000 800,000
Rent Expense 500,000 100,000 400,000
Utilities 240,000 48,000 192,000
Depreciation 120,000 24,000 96,000

After such allocation, selling expenses can now be

determined.
Note 4 – Selling Expenses
Freight – Out 500,000
Salaries Expense 200,000
Rent Expense 100,000
Utilities 48,000
Depreciation 24,000
Selling Expenses 872,000
Finally, selling expense can now be placed in
the statement of comprehensive income:
BEST SHIRTS
Statement of Comprehensive Income
For the Year Ended December 31, 2015

Net Sales (Note 1) 14,870,000

Cost of Sales (Note 3) 8,340,000
Gross Profit 8,340,000
Selling Expense (Note 4) 872,000
4. Determine the Administrative Expenses
NOTE 5 – ADMINISTRATIVE EXPENSES
Salaries Expense 800,000
Rent Expense 400,000
Utilities 192,000
Repairs and Maintenance 100,000
Depreciation 96,000
Permit and Licenses 10,000
Administrative Expenses 1,598,000

Administrative expenses can now be placed in the

working statement of comprehensive income
BEST SHIRTS
Statement of Comprehensive Income
For the Year Ended December 31, 2015

Net Sales (Note 1) 14,870,000

Cost of Sales (Note 3) 8,340,000
Gross Profit 6,530,000
Selling Expense (Note 4) 872,000
Administrative Expenses (Note 5) 1,598,000
5. Determine the Net Income
Net income is equal to total comprehensive
income.
BEST SHIRTS
Statement of Comprehensive Income
For the Year Ended December 31, 2015

Net Sales (Note 1) 14,870,000

Cost of Sales (Note 3) 8,340,000
Gross Profit 6,530,000
Selling Expense (Note 4) 872,000
Administrative Expenses (Note 5) 1,598,000
NET INCOME/ TOTAL COMPREHENSIVE 4,060,000
INCOME