Departmental Income Statement Elgin Flooring Company sells floor coverings through two departments, carpeting and hard covering (tile
Question:
Departmental Income Statement Elgin Flooring Company sells floor coverings through two departments, carpeting and hard covering (tile and linoleum). Operating information for 2016 appears below.
Carpeting Department | Hard Covering Department | ||||
---|---|---|---|---|---|
Inventory, January 1, 2016 | $74,000 | $40,000 | |||
Inventory, December 31, 2016 | 36,000 | 16,000 | |||
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 | 93,000 | 41,000 |
Common operating expenses of the firm were $120,000.
a. Prepare a departmental income statement showing departmental contribution to common expenses and net income of the firm. Assume an overall effective income tax rate of 35%. Elgin uses a periodic inventory 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 each department.
Round to the nearest whole percentage.
Carpeting department
Answer%
Hard Covering department
Answer%
c. If the common expenses were allocated 80% to the carpeting department and 20% to the hard covering department, what would the net 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 |