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In: Accounting

Selected information from the adjusted trial balance of Warmers Inc. as of December 31, 2019, follows:...

Selected information from the adjusted trial balance of Warmers Inc. as of December 31, 2019, follows:

Department A Department B Total
Merchandise Inventory, January 1 $ 43,000 $ 13,000 $ 56,000
Merchandise Inventory, December 31 53,000 10,800 63,800
Sales 493,800 329,200 823,000
Sales Returns and Allowances 4,938 3,292 8,230
Purchases 190,000 105,000 295,000
Freight In 480 480 960
Purchases Returns and Allowances 1,400 480 1,880
Sales Salaries Expense 98,000 48,000 146,000
Advertising Expense 14,800 4,800 19,600
Store Supplies Expense 640 22 662
Cash Short or Over 42 82 124
Insurance Expense 14,800
Rent Expense 34,000
Utilities Expense 5,800
Office Salaries Expense 38,000
Other Office Expense 1,300
Uncollectible Accounts Expense 4,800
Depreciation Expense—Furniture and Fixtures 5,800
Depreciation Expense—Office Equipment 480
Interest Income 280
Interest Expense 480


1. Insurance Expense: in proportion to the total of the furniture and fixtures (the gross assets before depreciation) and the ending inventory in the departments. These totals are as follows:

Department A $ 117,000
Department B 63,000
Total $ 180,000


2. Rent Expense and Utilities Expense: on the basis of floor space occupied, as follows:

Department A 4,350 square feet
Department B 1,450 square feet
Total 5,800 square feet


3. Office Salaries Expense, Other Office Expenses, and Depreciation Expense—Office Equipment: on the basis of the gross sales in each department.

4. Uncollectible Accounts Expense: on the basis of net sales in each department.

5. Depreciation Expense—Furniture and Fixtures: in proportion to cost of furniture and fixtures in each department. These costs are as follows.

Department A $ 28,800
Department B 19,200
Total $ 48,000


Prepare a departmental income statement for the year ended December 31, 2019. The bases for allocating indirect expenses are given above.
WARMERS INC.
Income Statement
Year Ended December 31, 2019
Department A Department B Total
Operating revenues
$0
0
Net sales $0 $0 $0
Cost of goods sold
$0
0
0
0
Delivered cost of purchases $0
0
Net delivered cost of purchases $0
Total merchandise available for sale $0
0
Cost of goods sold $0
$0 $0 $0
Operating expenses
Direct expenses
$0
0
0
0
0
Total direct expenses $0 $0 $0
$0
Indirect expenses
$0
0
0
0
0
0
0
0
0
Total indirect expenses $0 $0 $0
Net income from operations $0
Other Income
Other Expense
$0

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ekkarill92 answered 1 year ago
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