Williams Company began operations in January 2017 with two operating (selling) d

Question

Williams Company began operations in January 2017 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, 2017 Sales Cost of goods sold Gross profit Direct expenses Clock Mirror Combined $ 250,000 $ 85,000 S 335,000 122,500 52,700 175,200 127,500 32,300 159,800 Sales salaries Advertising Store supplies used Depreciation-Equipment Total direct expenses 21,500 8,000 500 500 400 9,400 1,600 750 2,300 26,150 29,500 2,100 1,250 2,700 35,550 Allocated expenses 4,020 11,120 5,400 20,000 36, 520 72,070 $ 80,050 $ 7,680 $ 87,730 7,100 Rent expense Utilities expense Share of office department expenses Total allocated expenses 3,200 2,200 9,000 21,300 15,220 47,450 24,620 11,000 Total expenses Net income

Explanation / Answer

Calculations:

WILLIAMS COMPANY Forecasted Departmental Income Statements For Year Ended December 31, 2018 Clock Mirror Paintings Combined Sales $ 272500 92650 49000 414150 Cost of goods sold 133525 57443 17150 208118 Gross profit 138975 35207 31850 206032 Direct expenses Sales salaries 21500 8000 6000 35500 Advertising 1600 500 900 3000 Store supplies used 818 545 900 2263 Depreciation-Equipment 2300 400 500 3200 Total direct expenses 26218 9445 8300 43963 Allocated expenses Rent expense 5680 3015 2425 11120 Utilities expense 2758 1464 1178 5400 Share of office department expenses 17831 6063 3206 27100 Total allocated expenses 26269 10542 6809 43620 Total expenses 52487 19987 15109 87583 Net income $ 86488 15220 16741 118450

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