Question

XSport Sporting Goods Co. operates two divisions—the Winter Sports Division and the Summer Sports Division. The following income and expense accounts were provided from the trial balance as of December 31, 20Y9, the end of the fiscal year, after all adjustments, including those for inventories, were recorded and posted:

Sales—Winter Sports Division	$10,540,000
Sales—Summer Sports Division	13,645,000
Cost of Goods Sold—Winter Sports Division	6,300,000
Cost of Goods Sold—Summer Sports Division	7,888,000
Sales expense—Winter Sports Division	1,660,000
Sales expense—Summer Sports Division	1,898,000
Administrative Expense—Winter Sports Division	1,014,000
Administrative Expense—Summer Sports Division	1,209,600
Advertising Expense	481,500
Transportation Expense	135,500
Accounts Receivable Collection Expense	120,450
Warehouse Expense	772,000

The bases to be used in allocating expenses, together with other essential information, are as follows:

A.	Advertising expense—incurred at headquarters, charged back to divisions on the basis of usage: Winter Sports Division, $219,300; Summer Sports Division, $262,200.
B.	Transportation expense—charged back to divisions at a charge rate of $5 per bill of lading: Winter Sports Division, 12,000 bills of lading; Summer Sports Division, 15,100 bills of lading.
C.	Accounts receivable collection expense—incurred at headquarters, charged back to divisions at a charge rate of $5 per invoice: Winter Sports Division, 9,680 sales invoices; Summer Sports Division, 14,410 sales invoices.
D.	Warehouse expense—charged back to divisions on the basis of floor space used in storing division products: Winter Sports Division, 90,000 square feet; Summer Sports Division, 103,000 square feet.

	Required:
1.	Prepare a divisional income statement with two column headings: Winter Sports Division and Summer Sports Division. Refer to the list of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. (Complete the Supporting Calculations tab first.) A colon (:) will fill in where needed.
2.	Provide supporting calculations for service department charges. XSport Sporting Goods Co. operates two divisions—the Winter Sports Division and the Summer Sports Division. The following income and expense accounts were provided from the trial balance as of December 31, 20Y9, the end of the fiscal year, after all adjustments, including those for inventories, were recorded and posted: Sales—Winter Sports Division $10,540,000 Sales—Summer Sports Division 13,645,000 Cost of Goods Sold—Winter Sports Division 6,300,000 Cost of Goods Sold—Summer Sports Division 7,888,000 Sales expense—Winter Sports Division 1,660,000 Sales expense—Summer Sports Division 1,898,000 Administrative Expense—Winter Sports Division 1,014,000 Administrative Expense—Summer Sports Division 1,209,600 Advertising Expense 481,500 Transportation Expense 135,500 Accounts Receivable Collection Expense 120,450 Warehouse Expense 772,000 The bases to be used in allocating expenses, together with other essential information, are as follows: A. Advertising expense—incurred at headquarters, charged back to divisions on the basis of usage: Winter Sports Division, $219,300; Summer Sports Division, $262,200. B. Transportation expense—charged back to divisions at a charge rate of $5 per bill of lading: Winter Sports Division, 12,000 bills of lading; Summer Sports Division, 15,100 bills of lading. C. Accounts receivable collection expense—incurred at headquarters, charged back to divisions at a charge rate of $5 per invoice: Winter Sports Division, 9,680 sales invoices; Summer Sports Division, 14,410 sales invoices. D. Warehouse expense—charged back to divisions on the basis of floor space used in storing division products: Winter Sports Division, 90,000 square feet; Summer Sports Division, 103,000 square feet. Required: 1. Prepare a divisional income statement with two column headings: Winter Sports Division and Summer Sports Division. Refer to the list of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. (Complete the Supporting Calculations tab first.) A colon (:) will fill in where needed. 2. Provide supporting calculations for service department charges. X Labels and Amount Descriptions

XSport Sporting Goods Co. operates two divisions—the Winter Sports Division and the Summer Sports Division. The following income and expense accounts were provided from the trial balance as of December 31, 20Y9, the end of the fiscal year, after all adjustments, including those for inventories, were recorded and posted:

Sales—Winter Sports Division	$10,540,000
Sales—Summer Sports Division	13,645,000
Cost of Goods Sold—Winter Sports Division	6,300,000
Cost of Goods Sold—Summer Sports Division	7,888,000
Sales expense—Winter Sports Division	1,660,000
Sales expense—Summer Sports Division	1,898,000
Administrative Expense—Winter Sports Division	1,014,000
Administrative Expense—Summer Sports Division	1,209,600
Advertising Expense	481,500
Transportation Expense	135,500
Accounts Receivable Collection Expense	120,450
Warehouse Expense	772,000

The bases to be used in allocating expenses, together with other essential information, are as follows:

A.	Advertising expense—incurred at headquarters, charged back to divisions on the basis of usage: Winter Sports Division, $219,300; Summer Sports Division, $262,200.
B.	Transportation expense—charged back to divisions at a charge rate of $5 per bill of lading: Winter Sports Division, 12,000 bills of lading; Summer Sports Division, 15,100 bills of lading.
C.	Accounts receivable collection expense—incurred at headquarters, charged back to divisions at a charge rate of $5 per invoice: Winter Sports Division, 9,680 sales invoices; Summer Sports Division, 14,410 sales invoices.
D.	Warehouse expense—charged back to divisions on the basis of floor space used in storing division products: Winter Sports Division, 90,000 square feet; Summer Sports Division, 103,000 square feet.

	Required:
1.	Prepare a divisional income statement with two column headings: Winter Sports Division and Summer Sports Division. Refer to the list of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. (Complete the Supporting Calculations tab first.) A colon (:) will fill in where needed.
2.	Provide supporting calculations for service department charges.

X

Labels and Amount Descriptions

Labels
Divisional selling and administrative expenses
Service department charges
Amount Descriptions
Accounts receivable collection expense
Advertising expense
Cost of goods sold
Divisional administrative expenses
Divisional selling expenses
Gross profit
Income from operations
Income from operations before service departments charges
Sales
Total divisional selling and administrative expenses
Total service department charges
Transportation expense
Warehouse expense

X

Divisional Income Statements

1. Prepare a divisional income statement with two column headings: Winter Sports Division and Summer Sports Division. Refer to the list of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. (Complete the Supporting Calculations tab first.) A colon (:) will fill in where needed.

XSport Sporting Goods Co.

Divisional Income Statements

For the Year Ended December 31, 20Y9

2. Provide supporting calculations for service department charges.Supporting Calculations

Service Department Charges
	Winter Sports Division	Summer Sports Division	Total
Advertising expense
Transportation rate per bill of lading
Number of bills of lading
Transportation expense
Accounts receivable collection rate
Number of sales invoices
Accounts receivable collection expense
Warehouse rate per sq. ft.
Number of square feet
Warehouse expense

Answer 1

XSport Sporting Goods Co.
Divisional Income Statements
For the Year Ended December 31, 20Y9
	Winter Sports Division	Summer Sports Division
Sales	10540000	13645000
Cost of goods sold	6300000	7888000
Gross profit	4240000	5757000
Divisional selling and administrative expenses:
Divisional selling expenses	1660000	1898000
Divisional administrative expenses	1014000	1209600
Total divisional selling and administrative expenses	2674000	3107600
Income from operations before service department charges	1566000	2649400
Service department charges:
Advertising expense	219300	262200
Transportation expense	60000	75500
Accounts receivable collection expense	48400	72050
Warehouse expense	360000	412000
Total service department charges	687700	821750
Income from operations	878300	1827650
XSport Sporting Goods Co.
Service Department Charges
For the Year Ended December 31, 20Y9
	Winter Sports Division	Summer Sports Division	Total
Advertising expense	219300	262200	481500
Transportation rate per bill of lading	5	5
Number of bills of lading	12000	15100
Transportation expense	60000	75500	135500
Accounts receivable collection rate	5	5
Number of sales invoices	9680	14410
Accounts receivable collection expense	48400	72050	120450
Warehouse rate per sq. ft.	4	4
Number of square feet	90000	103000
Warehouse expense	360000	412000	772000