Financial and Managerial Accounting: E24-9 Outdoor Athletic Equipment Co. operated two divisions

Financial and Managerial Accounting 
E24-9 Profit center responsibility reporting 
Outdoor Athletic Equipment Co. operated two divisions-the Winter Sports Division and the Summer Sports Division. The following income and expenses accounts were provided from the trial balance as of June 30, 2008, the end of the current fiscal year, after all adjustments, including those for inventories, were recorded and posted: 
Sales-Winter Sports (WS) Division 950,000 
Sales-Summer Sports (SS) Division 1,437,500 
Cost of Goods Sold-Winter Sports (WS) Division 512,500 
Cost of Goods Sold-Summer Sport (SS) Division 687,500 
Sales Expense-Winter Sports (WS) Division 150,000 
Sales Expense-Summer Sports (SS) Divisions 205,000 
Administrative Expense-Winter Sports (WS) Divisions 97,000 
Administrative Expense-Summer Sports (SS) Divisions 128,000 
Advertising Expense 64,500 
Transportation Expense 100,700 
Accounts Receivable Collection Expense 58,100 
Warehouse 120,000 

The bases to be used in allocating expense, 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, $28,000; Summer Sports Divisions, $36,500. 
b. Transportation expense-charged back to divisions at a transfer price of $7.60 per bill of lading: Winter Sports Divisions 6,000 bills of lading; Summer Sports Divisions, 7,250 bills of landing. 
c. Accounts receivable collection expense-incurred at headquarters, charged back to divisions at a transfer price of $5.60 per invoice: Winter Sports Division, 4,500 sales invoices; Summer Sports Division, 5,875 sales invoices. 
d. Warehouse expense-charged back to divisions on the basis of floor space used in storing divisions products: Winter Sports Division, 25,000 square feet: Summer Sports Division, 12,500 square feet. 

Instruction: 
Prepare a divisional income statement with two column heading: Winter Sports Division and Summer Sports Division. Provide supporting schedules for determining service department charges.
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