3. Reconcile the companys combined net income with the forecasted net income assuming that Department 200 is eliminated (list both items and amounts). (Amounts to be deducted should be indicated by a minus sign.)

The following information applies to the questions displayed below.J Elegant Decor Company's management is trying to decide whether to eliminate Department 200, which has produced losses or low profits for several yeors. The company's 2017 departmental income ststements shows the following. ELEGANT DECOR COMPANY Departmental Income Statements For Year Ended December 31, 2817 Sales Cost of goods sold Gross profit Operating expenses Dept. 180 Dept. 208 Combined $447,88 $286,880 $733,88e -465 889 211,8 476,809 182,e80 75,860 257,800 Direct expenses Advertising Store supplies used Depreciation-Store equipment Total direct expenses 16,580 6,880 4,88 27,380 12,580 5,480 3,280 21,180 29,880 11,480 8,80e 48,488 Allocated expenses Sales salaries Rent expense Bad debts expense Office salary Insurance expense Miscellaneous office expenses Total allocated expenses 184,880 14,150 17,180 26,880 3,300 4,68e 169, 15e 217,550 $ 50,298 $(1,840) 39,456e 65,880 9,418 9,780 15,680 2,180 2,680 184,418 131,718 39,800 4,740 7,480 18,480 1,280 2,88e 64,740 Total expenses Net income (loss) 85,84 In analyzing whether to eliminate Department 200, management considers the following: a. The company has one office worker who earns $500 per week, or $26,000 per year, and four sales clerks who each earn $500 per week, or $26,000 per year for each salesclerk. b. The full salaries of two salesclerks are charged to Deportment 100. The full salary of one salesclerk is charged to Department 200. The salary of the fourth clerk, whworks half-time in both departments, is divided evenly between the two departments. C. Eliminoting Department 200 would avoid the sales salaries and the office salary currently allocated to it However management prefers another plon. Two salesclerks have indicated that they will be quitting soon. Management believes that their work can be done by the other two clerks if the one office worker works in sales half-time Eliminating Department 200 will allow this shift of duties. If this change is implemented, half the office worker's salary would be reported as soles salaries and half would be reported as office salary d. The store building is rented under a long-term lease that cannot be chonged. Therefore, Department 100 will use the spoce and equipment currently used by Deportment 200 e. Closing Department 200 will eliminate its expenses for advertising, bad debts, and store supplies; 74% of the insurance expense allocated to it to cover its merchandise inventory; and 19% of the miscellaneous office expenses presently allocated to it Analysls Component 3. Reconcile the company's combined net income with the forecasted net income assuming that Department 200 is eliminated list both items and amounts). (Amounts to be deducted should be Indicated by a minus sign.) ELEGANT DECOR COMPANY Reconcilation of Combined Income with Forecasted Income Combined net income Forecasted net income