Williams Company began operations in January 2019 with two operating (selling) departments and one service (Office) department. Its departmental income statements follow. Ship WILLIAMS COMPANY Petang Departmental Income Statements For Year Ended December 31, 2019 Clock Mirror Combined Sales $ 150,000 $115,000 $ 265,000 Cost of goods sold 73,500 71,300 144,800 Gross profit 76,500 43,700 120,200 Direct expenses Sales salaries 21,000 7,100 28,109 Advertising 1,700 300 2,000 Store supplies used 700 550 1,250 Depreciation-Equipment 1,700 900 2,600 Total direct expenses 25,100 8,850 33,950 Allocated expenses Rent expense 7,060 3,960 11,020 Utilities expense 2,600 2,500 5,100 Share of office department expenses 13,000 4,000 17,000 Total allocated expenses 22,660 10,460 33,120 Total expenses 47,760 19,310 67,070 Net income $ 28,740 $ 24,390 $ 53,130 Williams plans to open a third department in January 2020 that will sell paintings. Management predicts that the new department will generate $48,000 in sales with a 65% gross profit margin and will require the following direct expenses: sales salaries, $6,500; advertising, $900; store supplies, $400, and equipment depreciation, $700. 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 $7,200. Since the Painting department will bring new customers into the store, management expects sales in both the Clock and Mirror departments to increase by 11%. 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 For ya Paintings targu Combined - Sales Cost of goods sold Gross profit Direct expenses Sales salaries Advertising Store supplies used Depreciation of equipment Total direct expenses Allocated expenses 0 0 0 Utilities expense Share of office dept. expenses Total allocated expenses Total expenses Net income 0 0 0
