College Accounting: Week 5 Homework (E25-1A, P25-9A, P25-9B)

College Accounting
Week 5 Homework (E25-1A, P25-9A, P25-9B)

E25-1A Gross Profit Section of Departmental Income Statement
Bill Walter and Alice Jennings are partners in a business called Walters and Jennings Sportswear that sells athletic footwear. They have organized the business on a department basis as follows: running shoes, walking shoes, and specialty shoes. At the end of the first year of operation, the sales and cost of goods sold for the three departments are as follows:
Running Shoes Walking Shoes
Sales 36,000 42,000
Cost of goods sold 23,400 23,520

Prepare the gross profit section of a department income statement for the year ended December 31, 20-. Show the gross profit for each department and for the business in total.
P 25-9A Income Statement With Departmental Direct Operating Margin and Total Operating Income. Durwood Thomas operates the Business Thomas Security that sells security equipment for commercial property and residential homes. The following information is provided for the year ended December 31, 20-.
Commercial Residential Homes
Net sales 465,000 135,000
Cost of goods sold 279,250 54,000
Direct operating expenses:
Advertising expense 35,000 20,000
Store clerk's wages expense 30,000 18,000
Truck drivers' wages expense 15,000 15,000
Bad debt expense 3,000 8,000
Depreciation expense delivery equipment 6,000 4,000
Other operating expenses 20,000 10,000
Indirect operating expenses:
Store clerks' wages expense 10,000
Advertising expense 15,000
Store rent expense 20,000
Other operating expenses 10,000

Required:
1. Prepare an income statement showing department direct operating margin and total operating income.
2. Calculate department direct operating margin percentages.

P25-9B Income Statement with Departmental Direct Operating Margin and Total Operating Income.
Tom Peterson owns the business Peterson's Furniture and Appliances. The following information is provided for the year ended December 31, 20-.
Furniture Department Appliances Department
Net sales 390,000 810,000
Cost of goods sold 234,000 405,000
Direct operating expenses:
Advertising expense 30,000 60,000
Store clerks' expense 40,000 90,000
Truck drivers' wages expense 35,000 65,000
Depreciation expense delivery equipment 4,000 8,000
Bad Debt expense 4,000 9,000
Other operating expenses 15,000 50,000

Indirect operating expenses:
Store clerks' wages expense 20,000
Advertising expense 15,000
Store rent expense 50,000
Other operating expenses 25,000

Required:
1. Prepare an income statement showing departmental direct operating margin and total operating income.
2. Calculate departmental direct operating margin percentages.
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