Williams Company began operations in January 2013 with two operating (selling) departments and one service (office) department. Its departmental income statements follow.

WILLIAMS COMPANY Departmental Income Statements For Year Ended December 31, 2013 Clock Mirror Combined Sales $ 240,000 $ 85,000 $ 325,000 Cost of goods sold 117,600 52,700 170,300 Gross profit 122,400 32,300 154,700 Direct expenses Sales salaries 20,500 7,300 27,800 Advertising 1,300 700 2,000 Store supplies used 850 550 1,400 DepreciationEquipment 1,400 300 1,700 Total direct expenses 24,050 8,850 32,900 Allocated expenses Rent expense 7,060 3,960 11,020 Utilities expense 2,800 2,300 5,100 Share of office department expenses 13,000 4,500 17,500 Total allocated expenses 22,860 10,760 33,620 Total expenses 46,910 19,610 66,520 Net income $ 75,490 $ 12,690 $ 88,180

Williams plans to open a third department in January 2014 that will sell paintings. Management predicts that the new department will generate $48,000 in sales with a 55% gross profit margin and will require the following direct expenses: sales salaries, $9,000; advertising, $900; store supplies, $400; and equipment depreciation, $700. It will fit the new department into the current rented space by taking some square foot-age from the other two departments. When opened the new painting department will fill one-fifth of the space presently used by the clock department and one-fourth used by the mirror department. Management does not predict any increase in utilities costs, which are allocated to the departments in proportion to occupied space (or rent expense). The company allocates office department expenses to the operating departments in proportion to their sales. It expects the painting department to increase total office department expenses by $7,400. Since the painting department will bring new customers into the store, management expects sales in both the clock and mirror departments to increase by 9%. No changes for those departments gross profit percents or their direct expenses are expected except for store supplies used, which will increase in proportion to sales.

Required:

Prepare departmental income statements that show the companys predicted results of operations for calendar year 2014 for the three operating (selling) departments and their combined totals. (Do not round intermediate calculations.)