Williams Company began operations in January 2019 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, 2019 Clock Mirror Combined Sales $ 180,000 $105,000 $ 285,000 Cost of goods sold 88,200 65,100 153,300 Gross profit 91,800 39,900 131,700 Direct expenses Sales salaries 22,000 8,000 30,000 Advertising 1,800 500 2,300 Store supplies used 1,100 800 1,900 Depreciation-Equipment 2,500 500 3,000 Total direct expenses 27,400 9,800 37,200 Allocated expenses Rent expense 7,040 3,900 10,940 Utilities expense 3,000 1,600 4,600 Share of office department expenses 12,000 6,000 18,000 Total allocated expenses 22,040 33,540 Total expenses 70,740 Net income 42,360 $ 18,600 $ 60,960 49,440 11,500 21,300 Williams plans to open a third department in January 2020 that will sell paintings. Management predicts that the new department will generate $50,000 in sales with a 55% gross profit margin and will require the following direct expenses: sales salaries, $6,000; advertising, $900; store supplies, $300, and equipment depreciation, $1,000. It will fit the new department into the current rented space by taking some square footage 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 $7,300. Since the Painting department will bring new customers into the store, management expects sales in both the Clock and Mirror departments to increase by 12%. 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 company's predicted results of operations for calendar-year 2020 for the three operating (selling) departments and their combined totals. (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.) WILLIAMS COMPANY Forecasted Departmental Income Statements For Year Ended December 31, 2020 Clock Mirror Paintings Combined Direct expenses .............................................................................................. Total direct expenses Allocated expenses Total allocated expenses Total expenses
