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 $ 230,00 $ 95,00 $ 325,000 Cost of goods sold 112,780 58,988 171,688 Gross profit 117,380 36,182 153,480 Direct expenses Sales salaries 28.000 8.00 28,000 Advertising 1,200 500 1.780 Store Supplies used 950 389 1,250 Depreciation-Equipment 2,100 2.680 Total direct expenses 24,25 9,388 33,55 Allocated expenses Rent expense 7,110 3,600 10.710 Utilities expense 3.200 1,788 4,900 Share of office department expenses 11,500 6.000 17.500 Total allocated expenses 21,819 11,300 33. 110 Total expenses 46,860 20.600 66,66 Net Income $ 71.240 $ 15,500 $ 86,748 See 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 45% gross profit margin and will require the following direct expenses: sales salaries, $7,000: advertising. $700: store supplies, $900, and equipment depreciation, $600. 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 utilitles costs, which are allocated to the departments in proportion to occupied space for 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 $8,100. Since the Painting department will bring new customers into the store. management expects sales in both the Clock and Mirror departments to Increase by 14%. 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.) Paintings Combined 01 WILLIAMS COMPANY Forecasted Departmental Income Statements For Year Ended December 31, 2020 Clock Mirror Sales Cost of goods sold Gross profit ol Direct expenses | Sales salaries Advertising Store supplies used | Depreciation of equipment Total direct expenses 0 0 Allocated expenses | Rent expense Utilities expense Share of office dept. expenses Total allocated expenses Total expenses Net income $ 0 $ 0 0 $ 0 0
