Question

Williams Company began operations in January 2015 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, 2015 Clock $ 210,000 102.900 Sales Cost of goods sold Mirror Combined $95.000 $ 305,000 58.900 161,800 107,100 36,100 143,200 Gross profit Direct expenses Sales salaries Advertising Store supplies used Depreciation Equipment 21.000 1.700 1,000 1,300 400 500 600 27.900 2.100 1,500 1.900 25,000 8,400 33,400 Total direct expenses Allocated expenses Rent expense Utilities expense Share of office department expenses 7,050 2.400 11,500 3,900 2,300 7.000 10.950 4,700 18,500 Total allocated expenses 20.950 13,200 34,150 Total expenses 45,950 21,600 67,550 Net Income $ 61,150 $14,500 $ 75,650 Williams plans to open a third department in January 2016 that will sell paintings. Management predicts that the new department will generate $50,000 in sales with a 85% gross profit margin and will require the following direct expenses: sales salaries, $6,500: advertising. $600: store supplies, $1,000, and equipment depreciation, $900. It will fit the new department into the current rented space by taking some square foot- age 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 $8,500. Since the painting department will bring new customers into the store, management expects sales in both the clock and mirror departments to increase by 6%. 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 2016 for the three operating (selling) departments and their combined totals. (Do not round intermediate calculations. Round your final answer to nearest whole dollar amount.)

Williams Company began operations in January 2015 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, 2015
		Clock			Mirror		Combined
Sales	$	210,000		$	95,000		$	305,000
Cost of goods sold		102,900			58,900			161,800
Gross profit		107,100			36,100			143,200
Direct expenses
Sales salaries		21,000			6,900			27,900
Advertising		1,700			400			2,100
Store supplies used		1,000			500			1,500
Depreciation—Equipment		1,300			600			1,900
Total direct expenses		25,000			8,400			33,400
Allocated expenses
Rent expense		7,050			3,900			10,950
Utilities expense		2,400			2,300			4,700
Share of office department expenses		11,500			7,000			18,500
Total allocated expenses		20,950			13,200			34,150
Total expenses		45,950			21,600			67,550
Net income	$	61,150		$	14,500		$	75,650

Williams plans to open a third department in January 2016 that will sell paintings. Management predicts that the new department will generate $50,000 in sales with a 85% gross profit margin and will require the following direct expenses: sales salaries, $6,500; advertising, $600; store supplies, $1,000; and equipment depreciation, $900. It will fit the new department into the current rented space by taking some square foot-age 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 $8,500. Since the painting department will bring new customers into the store, management expects sales in both the clock and mirror departments to increase by 6%. 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 2016 for the three operating (selling) departments and their combined totals. (Do not round intermediate calculations. Round your final answer to nearest whole dollar amount.)

Answer 1

Departmental account is the account prepared for calculating separate income and expenses of the organisation. The organisation get profit or loss by every department wise.

WILLIAM COMPANY Forecasted Departmental Income statment for the year ended December 31, 2016. particular clock() Mixa (3) paintings e) combinada sales |222, 600 100,700 50,000 373,300 cost of goods sold 109074 62 434 7.500 179008 Gross profit 113526 38,266 42,500 194292 Direct expenses sales salaries 21000 6,900 6500 34,400 Advertising 1700 400 600 2700 store supplies 1060 530 1000 2590 Equipment Depreciation 1,300 600 900 2800 total direct expense 25060 8430 9000 42 490 Allocated Compenses Rent expenses 5640 2925 2385 10950. lotilities expenses 2421 1255 1024 4,700 share of office 16,100 7283 3617 27000 departmental expenses Total allocated expenses 24161 11 463 7026 42650 Total expenses - Net Income 49221 19893 1602685,140 64305 18373 26 474 109152