Selected information from the adjusted trial balance of Tops4U as of December 31, 2016, follows:

INSTRUCTIONS
Prepare a departmental income statement for the year ended December 31, 2016. The bases for allocating indirect expenses are given below. Show all allocations in a neat and orderly form.
1. Insurance Expense: in proportion to the total of the furniture and fixtures (the gross assets before depreciation) and the ending inventory in the departments. These totals are as follows:
Department A................$180,000
Department B..................120,000
Total...........................$300,000
2. Rent Expense and Utilities Expense: on the basis of floor space occupied, as follows:
Department A..................4,900 square feet
Department B..................2,100 square feet
Total.............................7,000 square feet
3. Office Salaries Expense, Other Office Expenses, and Depreciation Expense-Office Equipment: on the basis of the gross sales in each department.
4. Uncollectible Accounts Expense: on the basis of net sales in each department.
5. Depreciation Expense-Furniture and Fixtures: in proportion to cost of furniture and fixtures in each department. These costs are as follows. (Round to nearest dollar.)
Department A.............$39,000
Department B...............21,000
Total.........................$60,000
Analyze: Which department reports the highest return on net sales?

Transcribed Image Text:

Department A Department B Total Merchandise Inventory, January Merchandise Inventory, December 31 Sales Sales Returns and Allowances Purchases Freight In S 55,000 51,000 01,000 5,010 250,000 600 S 25,000 12,000 334,000 3,340 165,000 600 S 80,000 63,000 835,000 8,350 415,000 1,200 Purchases Returns and Allowances 110,000 170,000 6,000 ies Expense Uncollectible Accounts Expense Depreciation Expense- Furniture and Fixtures Depreciation Expense-Office Equipment