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...

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	$12,600,000
Sales—Summer Sports Division	16,300,000
Cost of Goods Sold—Winter Sports Division	7,560,000
Cost of Goods Sold—Summer Sports Division	9,454,000
Sales Expense—Winter Sports Division	2,016,000
Sales Expense—Summer Sports Division	2,282,000
Administrative Expense—Winter Sports Division	1,260,000
Administrative Expense—Summer Sports Division	1,450,700
Advertising Expense	578,000
Transportation Expense	265,660
Accounts Receivable Collection Expense	174,000
Warehouse Expense	1,540,000

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, $252,000; Summer Sports Division, $326,000.
B.	Transportation expense—charged back to divisions at a charge rate of $7.40 per bill of lading: Winter Sports Division, 17,200 bills of lading; Summer Sports Division, 18,700 bills of lading.
C.	Accounts receivable collection expense—incurred at headquarters, charged back to divisions at a charge rate of $6.00 per invoice: Winter Sports Division, 11,500 sales invoices; Summer Sports Division, 17,500 sales invoices.
D.	Warehouse expense—charged back to divisions on the basis of floor space used in storing division products: Winter Sports Division, 102,000 square feet; Summer Sports Division, 118,000 square feet.

	Required:
1.	Prepare a divisional income statement with two column headings: Winter Sports Division and Summer Sports Division. Refer to the list of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. “Less” or “Plus” and colons will automatically appear if it is required. Be sure to complete the statement heading. (You may find it useful to work the Supporting Calculations first.)
2.	Provide supporting calculations for service department charges.

Labels
For the Year Ended December 31, 20Y8
For the Month Ended December 31, 20Y8
Service department charges
Amount Descriptions
Accounts receivable collection expense
Advertising expense
Cost of goods sold
Divisional administrative expenses
Divisional selling expenses
Gross profit
Income from operations
Income from operations before service department charges
Sales
Total divisional expenses
Total service department charges
Transportation expense
Warehouse expense

1. Prepare a divisional income statement with two column headings: Winter Sports Division and Summer Sports Division. Refer to the list of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. “Less” or “Plus” and colons will automatically appear if it is required. Be sure to complete the statement heading. (You may find it useful to work the Supporting Calculations first.)

GLADES SPORTING GOODS CO.

Divisional Income Statements

1	Winter Sports Division	Summer Sports Division
2
3
4
5
6
7
8
9
10
11
12
13
14
15

2. Provide supporting calculations for service department charges.

Service Department Charges
	Winter Sports Division	Summer Sports Division	Total
Advertising expense

Transportation rate per bill of lading
× Number of bills of lading
Transportation expense

Accounts receivable collection rate
× Number of sales invoices
Accounts receivable collection expense

Warehouse rate per sq. ft.
× Number of square feet
Warehouse expense

Jun 01, 2022

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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...

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