Question
Championship Sports Inc. operates two divisionsthe Winter Sports Division and the Summer Sports Division. The following income and expense accounts were provided from the trial
Championship Sports Inc. operates two divisionsthe Winter Sports Division and the Summer Sports Division. The following income and expense accounts were provided from the trial balance as of December 31, 20Y9, the end of the fiscal year, after all adjustments, including those for inventories, were recorded and posted:
| Line Item Description | Amount |
|---|---|
| SalesWinter Sports Division | $33,600,000 |
| SalesSummer Sports Division | 37,120,000 |
| Cost of Goods SoldWinter Sports Division | 20,160,000 |
| Cost of Goods SoldSummer Sports Division | 21,440,000 |
| Sales ExpenseWinter Sports Division | 5,760,000 |
| Sales ExpenseSummer Sports Division | 5,120,000 |
| Administrative ExpenseWinter Sports Division | 3,360,000 |
| Administrative ExpenseSummer Sports Division | 3,296,000 |
| Advertising Expense | 941,000 |
| Transportation Expense | 470,400 |
| Accounts Receivable Collection Expense | 225,600 |
| Warehouse Expense | 3,200,000 |
The bases to be used in allocating expenses, together with other information, are as follows:
Advertising expenseincurred at headquarters, allocated to divisions on the basis of usage: Winter Sports Division, $442,000; Summer Sports Division, $499,000.
Transportation expenseallocated to divisions at a rate of $16 per bill of lading: Winter Sports Division, 14,000 bills of lading; Summer Sports Division, 15,400 bills of lading.
Accounts receivable collection expenseincurred at headquarters, allocated to divisions at a rate of $8 per invoice: Winter Sports Division, 13,000 sales invoices; Summer Sports Division, 15,200 sales invoices.
Warehouse expenseallocated to divisions on the basis of floor space used in storing division products: Winter Sports Division, 180,000 square feet; Summer Sports Division, 220,000 square feet.
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Accounting For Inventory
Authors: Steven M. Bragg
1st Edition
1938910222, 9781938910227
