J Horner is the proprietor of a shop selling paintings and ornaments. For the purposes of his financial statements he wishes the business to be divided into two departments:

Dept. A Paintings

Dept. B Ornaments

The following balances have been extracted from his nominal ledger at 31 August 2016:

	Debit	Credit
	K	K
Sales Department A		75,000
Sales Department B		50,000
Stocks Department A, 1 September 2015	1,250
Stocks Department B, 1 September 2015	1,000
Purchases Department A	51,000
Purchases Department B	38,000
Wages of sales assistants Department A	7,200
Wages of sales assistants Department B	6,800
Picture framing costs	300
General office salaries	13,200
Fire insurance buildings	360
Lighting and heating	620
Repairs to premises	175
Internal telephone	30
Cleaning	130
Accountancy charges	1,490
General office expenses	510

Inventory at 31 August 2016 valued at:

Dept. A K1, 410

Dept. B K912

The proportion of the total floor area occupied by each department was:

Dept. A two-fifths

Dept. B three- fifths

The apportionment should be made by using the methods as follows:

Area-fire insurance, lighting and heating, repairs, telephone, cleaning; turnover-general office salaries, accountancy, general office expenses.

Required:

1. Prepare Sishwashwas department income statement for the year ending 31 August 2016, apportioning the costs, where necessary, to show the net profit or net loss of each department.
2. Explain the purpose of preparing a departmental Income statement