Free

50.1K

Verified Solution

Link Copied!

Departmental Income Statement
Elgin Flooring Company sells floor coverings through twodepartments, carpeting and hard covering (tile and linoleum).Operating information for 2016 appears below.

				Carpeting Department	Hard Covering Department
Inventory, January 1, 2016				$71,000	$37,000
Inventory, December 31, 2016				39,000	19,000
Net sales				780,000	480,000
Purchases				484,000	362,000
Purchases returns				28,000	8,000
Purchases discounts				16,000	4,000
Transporation in				18,000	14,000
Traceable departmental expenses				96,000	44,000

Common operating expenses of the firm were $120,000.

a. Prepare a departmental income statement showing departmentalcontribution to common expenses and net income of the firm. Assumean overall effective income tax rate of 35%. Elgin uses a periodicinventory system.

Do not use negative signs with any of your answers below.

Elgin Flooring Company Departmental Income Statement For the Year Ended December 31, 2016
				Carpeting Department	Hard Covering Department	Total
Net sales				Answer	Answer	Answer
Cost of goods sold:
Inventory, January 1, 2016				Answer	Answer	Answer
Purchases				Answer	Answer	Answer
Purchases returns				Answer	Answer	Answer
Purchases discounts				Answer	Answer	Answer
Transportation in				Answer	Answer	Answer
Cost of goods available for sale				Answer	Answer	Answer
Inventory, December 31, 2016				Answer	Answer	Answer
Cost of goods sold				Answer	Answer	Answer
Gross Profit				Answer	Answer	Answer
Traceable department expenses				Answer	Answer	Answer
Contribution to common expenses				Answer	Answer	Answer
Common expenses						Answer
Income before tax						Answer
Income tax expense						Answer
Net income						Answer

b. Calculate the gross profit percentage for eachdepartment.

Round to the nearest whole percentage.

Carpeting department

Answer%

Hard Covering department

Answer%

c. If the common expenses were allocated 70% to the carpetingdepartment and 30% to the hard covering department, what would thenet income be for each department?

Do not use negative signs with any of your answers below.

				Carpeting Department	Hard Covering Department	Total
Contribution to common expenses				Answer	Answer	Answer
Common expenses				Answer	Answer	Answer
Income before tax				Answer	Answer	Answer
Income tax expense				Answer	Answer	Answer
Net income				Answer	Answer	Answer