Glades 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, 20Y8, the end of the fiscal year, after all adjustments, including those for inventories, were recorded and posted: Sales-Winter Sports Division $31,920,000 Sales-Summer Sports Division 35,264,000 Cost of Goods Sold-Winter Sports Division 19,152,000 Cost of Goods Sold-Summer Sports Division 20,368,000 Sales Expense-Winter Sports Division 5,472,000 Sales Expense-Summer Sports Division 4,864,000 Administrative Expense-Winter Sports Division 3,192,000 Administrative Expense-Summer Sports Division 3,131,200 Advertising Expense 1,025,000 Transportation Expense 400,400 Accounts Receivable Collection Expense 245,700 Warehouse Expense 3,040,000 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, $481,000; Summer Sports Division, $544,000. b. Transportation expense-charged back to divisions at a charge rate of $14 per bill of lading: Winter Sports Division, 13,600 bills of lading; Summer Sports Division, 15,000 bills of lading. C. Accounts receivable collection expense-incurred at headquarters, charged back to divisions at a charge rate of $9 per invoice: Winter Sports Division, 12,600 sales invoices; Summ Sports Division, 14,700 sales invoices. d. Warehouse expense-charged back to divisions on the basis of floor space used in storing division products: Winter Sports Division, 170,000 square feet; Summer Sports Division, 210,000 square feet.
Glades 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, 20Y8, the end of the fiscal year, after all adjustments, including those for inventories, were recorded and posted: Sales-Winter Sports Division $31,920,000 Sales-Summer Sports Division 35,264,000 Cost of Goods Sold-Winter Sports Division 19,152,000 Cost of Goods Sold-Summer Sports Division 20,368,000 Sales Expense-Winter Sports Division 5,472,000 Sales Expense-Summer Sports Division 4,864,000 Administrative Expense-Winter Sports Division 3,192,000 Administrative Expense-Summer Sports Division 3,131,200 Advertising Expense 1,025,000 Transportation Expense 400,400 Accounts Receivable Collection Expense 245,700 Warehouse Expense 3,040,000 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, $481,000; Summer Sports Division, $544,000. b. Transportation expense-charged back to divisions at a charge rate of $14 per bill of lading: Winter Sports Division, 13,600 bills of lading; Summer Sports Division, 15,000 bills of lading. C. Accounts receivable collection expense-incurred at headquarters, charged back to divisions at a charge rate of $9 per invoice: Winter Sports Division, 12,600 sales invoices; Summ Sports Division, 14,700 sales invoices. d. Warehouse expense-charged back to divisions on the basis of floor space used in storing division products: Winter Sports Division, 170,000 square feet; Summer Sports Division, 210,000 square feet.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
1. Prepare a divisional income statement headings: Winter Sports Division and Summer Sports Division. Do not round your interim calculations.
2.
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Glades 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, 20Y8, the end of the fiscal year, after all adjustments, including those for inventories, were recorded and posted:
Sales-Winter Sports Division
$31,920,000
Sales-Summer Sports Division
35,264,000
Cost of Goods Sold-Winter Sports Division
19,152,000
Cost of Goods Sold-Summer Sports Division
20,368,000
Sales Expense-Winter Sports Division
5,472,000
Sales Expense-Summer Sports Division
4,864,000
Administrative Expense-Winter Sports Division
3,192,000
Administrative Expense-Summer Sports Division
3,131,200
Advertising Expense
1,025,000
Transportation Expense
400,400
Accounts Receivable Collection Expense
245,700
Warehouse Expense
3,040,000
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, $481,000; Summer Sports Division, $544,000.
b. Transportation expense-charged back to divisions at a charge rate of $14 per bill of lading: Winter Sports Division, 13,600 bills of lading; Summer Sports Division, 15,000 bills of
lading.
C. Accounts receivable collection expense-incurred at headquarters, charged back to divisions at a charge rate of $9 per invoice: Winter Sports Division, 12,600 sales invoices; Summer
Sports Division, 14,700 sales invoices.
d. Warehouse expense-charged back to divisions on the basis of floor space used in storing division products: Winter Sports Division, 170,000 square feet; Summer Sports Division,
210,000 square feet.
Prepare a divisional income statement with two column headings: Winter Sports Division and Summer Sports Division. Do not round vour interim calculations.
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