Departmental Income Statement Elgin Flooring Company sells floor coverings through two de-

partments, carpeting and hard covering (tile and linoleum). Operating information for 2019 appears

below

Carpeting

Department

Hard Covering

Department

Inventory, January 1, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 60,000 $ 26,000

Inventory, December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000 30,000

Net sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500,000 800,000

Purchases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000 560,000

Purchases returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,000 8,000

Purchases discounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,000 4,000

Transportation in . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,000 14,000

Traceable departmental expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 108,000 56,000

Common operating expenses of the firm were $225,000.

Required

a. Prepare a departmental income statement showing departmental contribution to common ex-

penses and net income of the firm. Assume an overall effective income tax rate of 20%. Elgin

uses a periodic inventory system.

b. Calculate the gross profit percentage for each department.

c. If the common expenses were allocated 40% to the carpeting department and 60% to the hard

covering department, what would the net income be for each department?