Williams Company began operations in January 2019 with two operating (selling) departments and one service (office) department. Its departmental income statements follow

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Williams plans to open a third department in January 2020 that will sell paintings. Management predicts that the new department will generate $80,000 in sales with a 55% gross profit margin and will require the following direct expenses: sales salaries, $9,000; advertising, $1,300; store supplies, $1,000; 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 $27,000. Since the Painting department will bring new customers into the store, management expects sales in both the Clock and Mirror departments to increase by 8%. 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 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.)

14.28 points eBook Print References AMS COMPANY Departmental Income Statements For Year Ended December 31, 2019 Clock Mirror Combined Sales $ 230,000 $ 105,000 $ 335,000 Cost of goods sold 112,700 65, 100 177,800 Gross profit 117,300 39,900 157,200 Direct expenses Sales salaries 21,000 7,000 28,000 Advertising 1,400 1,000 2,400 Store supplies used 1,400 900 2,300 Depreciation-Equipment 1,700 800 2,500 Total direct expenses 25,500 9,700 35,200 Allocated expenses Rent expense 7,020 3,780 10,800 Utilities expense 2,600 1,400 14,000 Share of office department expenses 10,500 4,500 15,000 Total allocated expenses 20, 120 9,680 39,800 Total expenses 45,620 19,380 75,000 Net income $ 71,680 $ 20,520 $ 82,200 | | | 7 14.28 points WILLIAMS COMPANY Forecasted Departmental Income Statements For Year Ended December 31, 2020 Clock Mirror Paintings $ 248,400 $ 113,400 $ 80,000 121,716 70.308 192,024 126,684 43,092 (112,024) Combined $ 441.800 Sales eBook Cost of goods sold 441,800 Print Direct expenses References 0 0 0 0 Total direct expenses Allocated expenses 0 0 0 Total allocated expenses Total expenses 0 43,092 0 0 441,800 $ 126,684 $ $ (112,024) $