the sales salaries expenses are incorrect. everything else is right.

Elegant Decor Company's management is trying to decide whether to eliminate Department 200, which has produced losses or low profits for several years. The company's departmental income statements show the following. Dept. 200 $ 284,000 208,000 76,000 Combined $731,000 474,000 257,000 ELEGANT DECOR COMPANY Departmental Income Statements For Year Ended December 31, 2019 Dept. 100 Sales $447,000 Cost of goods sold 266,000 Gross profit 181,000 Operating expenses Direct expenses Advertising 16,000 Store supplies used 6,000 Depreciation-Store equipment 4,800 Total direct expenses 26,800 Allocated expenses Sales salaries 78,000 Rent expense 9,490 Bad debts expense 9,600 Office salary 21,840 Insurance expense 2,500 Miscellaneous office expenses 2,100 Total allocated expenses 123,530 Total expenses 150,330 Net income (los) $ 30,670 12,500 5,700 3.700 21,900 28,500 11,700 8,500 48,700 46,800 4,740 7,400 14,560 1,700 1,300 76,500 98,400 $(22,400) 124,800 14,230 17,000 36,400 4,200 3,400 200,030 248,730 $ 8,270 In analyzing whether to eliminate Department 200, management considers the following: a. The company has one office worker who earns $700 per week, or $36,400 per year, and four salesclerks who each earns $600 per week, or $31,200 per year for each salesclerk. b. The full salaries of two salesclerks are charged to Department 100. The full salary of one salesclerk is charged to Department 200. The salary of the fourth clerk, who works half-time in both departments, is divided evenly between the two departments. c. Eliminating Department 200 would avoid the sales salaries and the office salary currently allocated to it. However, management prefers another plan. 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 sales salaries and half would be reported as office salary. d. The store building is rented under a long-term lease that cannot be changed. Therefore, Department 100 will use the space and equipment currently used by Department 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 24% of the miscellaneous office expenses presently allocated to it. Required: 1. Complete the following report showing total expenses, expenses that would be eliminated by closing Department 200 and the expenses that would continue. The statement should reflect the reassignment of the office worker to one-half time as salesclerk, ELEGANT DECOR COMPANY Analysis of Expenses under Elimination of Department 200 Total Eliminated Continuing Expenses Expenses Expenses Cost of goods sold $ 474.000 $ 208,000 5 266,000 Direct expenses Advertising 28,500 12,500 16,000 Store supplies used 11,700 5,700 6,000 Depreciation Store equipment 8,500 0 8,500 Allocated expenses Sales salaries 124,800 46,800 78,000 Rent expense 14,230 0 14,230 Bad debts expense 17,000 7.400 9,600 Office salary 36,400 18.200 18,200 Insurance expense 4,200 1,258 2,9421 Miscellaneous office expenses 3,400 312 3,088) Total expenses $ 722.730 $ 300,170 $ 422,560 2. Prepare a forecasted annual income statement for the company reflecting the elimination of Department 200 assuming that it will not affect Department 100's sales and gross profit. The statement should reflect the reassignment of the office worker to one-half time as a salesclerk ELEGANT DECOR COMPANY Forecasted Annual Income Statement Under Plan to Eliminate Department 200 Sales $ 447,000 Cost of goods sold 286,000 Gross profit from sales 181,000 Operating expenses Advertising 16,000 Store supplies used 6,000 Depreciation of store equipment 8,500 Sales salaries 49.400 Rent expense 14.230 Bad debts expenso 9,600 Office salary 18,200 Insurance expense 2,942 Miscellaneous office expenses 3,088) Total operating expenses 127,960 Net income $ 53,040