Panda Airlines Inc. has two divisions organized as profit centers, the Passenger Division and the Cargo Division. The following divisional income statements were prepared: PANDA AIRLINES INC. Divisional Income Statements For the Year Ended April 30, 20Y9   Passenger Division Cargo Division Revenues   $2,114,000    $2,114,000  Operating expenses   (1,711,280)   (1,884,000) Operating income before    service department charges   $402,720    $230,000  Less service department charges:            Training $94,500    $94,500       Flight scheduling 89,010    89,010       Reservations 94,800  (278,310) 94,800  (278,310) Operating income (loss)   $124,410    $(48,310) The service department charge rate for the service department costs was based on revenues. Since the revenues of the two divisions were the same, the service department charges to each division were also the same. The following additional information is available:   Passenger Division Cargo Division Total Number of personnel trained 300   120   420   Number of flights 360   500   860   Number of reservations requested 15,800   0   15,800   Using service charge rates for service department charges, correct the divisional income statements. If an amount box does not require an entry, leave it blank or enter "0".

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Panda Airlines Inc. has two divisions organized as profit centers, the Passenger Division and the Cargo Division. The following divisional income statements were prepared:

PANDA AIRLINES INC.
Divisional Income Statements
For the Year Ended April 30, 20Y9
  Passenger Division Cargo Division
Revenues   $2,114,000    $2,114,000 
Operating expenses   (1,711,280)   (1,884,000)
Operating income before
   service department charges
  $402,720    $230,000 
Less service department charges:        
   Training $94,500    $94,500   
   Flight scheduling 89,010    89,010   
   Reservations 94,800  (278,310) 94,800  (278,310)
Operating income (loss)   $124,410    $(48,310)

The service department charge rate for the service department costs was based on revenues. Since the revenues of the two divisions were the same, the service department charges to each division were also the same.

The following additional information is available:

  Passenger
Division
Cargo
Division
Total
Number of personnel trained 300   120   420  
Number of flights 360   500   860  
Number of reservations requested 15,800   0   15,800

 

Using service charge rates for service department charges, correct the divisional income statements. If an amount box does not require an entry, leave it blank or enter "0".

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